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Southwest leads off fare hike

As fuel prices rise, airlines pass on costs to customers

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Southwest Airlines Co., the largest discount carrier, led seven of the biggest U.S. airlines in boosting round-trip fares as much as $20 to help offset higher fuel costs.

Southwest's tickets rose $1 to $10 each way, depending on distance, on Aug. 31, spokeswoman Beth Harbin said Wednesday.

American Airlines, United Airlines, Continental Airlines Inc., Northwest Airlines Corp. and US Airways Group Inc. matched the fares over the weekend, spokesmen said. Delta Air Lines Inc. and AirTran Holdings Inc. raised prices to a lesser extent.

The increase marked airlines' latest bid to blunt this year's 24 percent gain in jet fuel prices. Fuel is one of the industry's two biggest expenses, along with labor, and carriers are trying to pass more of the costs to customers.

"It is increasingly evident that if we are to count on higher oil prices, we can count on Southwest pushing fares higher," Jamie Baker, a JPMorgan Chase & Co. analyst in New York, said Wednesday in a report to investors.

Major U.S. carriers this year have put through 10 broad fare increases, including four led by Southwest. Three of the four initiated by Dallas-based Southwest increased the price of at least some round-trip tickets by $20.

Of the 10 largest U.S. carriers, measured by passenger traffic, only JetBlue Airways Corp. and Alaska Air Group Inc. hadn't joined in the latest price increase.

Delta, the third-largest U.S. airline, raised fares $1 or $5 each way, depending on distance, spokeswoman Betsy Talton said. AirTran, a low-fare carrier that flies mainly in the Eastern United States, said it raised fares in some markets, without offering specifics.

Southwest shares rose 27 cents, or 1.8 percent, to $15.38 in New York Stock Exchange composite trading early Wednesday. Before Wednesday, they had fallen 1.4 percent this year.

Other U.S. airlines also gained after a Lehman Brothers Holdings Inc. analyst said lower fuel prices and increased revenue should boost earnings in the third and fourth quarters. Analyst Gary Chase raised his third-quarter earnings estimates for eight major carriers in a report to investors.

Southwest boosted fares $1 each way on flights under 500 miles, $3 for 500 to 999 miles, $5 for 1,000 to 1,249 miles, and $5 for more than 1,250 miles with tickets purchased in advance, Harbin said. The fare increase was $10 for trips of more than 1,250 miles purchased just before travel.

Flights within California and new nonstop service from Denver to five other cities weren't included in Southwest's increases.