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Airlines raising fares despite lower fuel costs

  • JIM BORG / 2012
    The state Department of Transportation’s Airports Division and tourism officials will petition Customs and Border Protection to allow them to reopen Kona Airport as a second international port of entry. A Hawaiian Airlines flight prepares to take off in Kona.
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DALLAS » U.S. airlines are raising base fares on many domestic flights even though they are getting a windfall from lower fuel prices.

JetBlue Airways raised fares by $4 per round trip on a small number of routes Thursday, and Delta Air Lines picked up and greatly expanded the breadth of the increase, according to FareCompare.com CEO Rick Seaney and J.P. Morgan analyst Jamie Baker.

The hike got an important boost when Southwest matched it a day later. Other airlines often drop price hikes if they are resisted by Southwest, which carries the most domestic passengers.

Seaney said he has not seen any significant price drops from Hawaiian Airlines, which is scheduled to report its financial results after the stock market closes Tuesday.

A JetBlue spokeswoman confirmed that the airline initiated the increase on its domestic flights. Delta said it had matched and expanded "an industry increase." United Airlines and American Airlines, which also owns US Airways, confirmed matching the $4 increase.

Higher base fares don’t always result in passengers paying more. Airlines run frequent sales, and they adjust fares on individual flights depending on demand. The last successful broad increase occurred in April.

The increase showed that fear of Ebola hasn’t hurt travel demand and that airlines have not passed savings from lower fuel prices to consumers, Seaney said.

Oil prices, which show up in the cost of jet fuel, have fallen by about one-fifth since late April. Fuel is the largest expense for most airlines. Seaney said kerosene jet fuel is at a four-year low.

Airline stocks rallied for a third straight day:

» Hawaiian Holdings Inc., parent of Hawaiian Airlines, rose $1.18, or 8.8 percent, to $14.50.

» Shares of American Airlines Group Inc. closed up $1.84, or 5.5 percent, to $35.22.

» Delta Air Lines Inc. rose $1.65, or 4.8 percent, to $36.04.

» JetBlue Airways Corp. climbed 37 cents, or 3.4 percent, to $11.23.

» Southwest Airlines Co. gained $1.79, or 5.8 percent, to $32.84.

» United Continental Holdings Inc. gained $2.61, or 5.8 percent, to $47.29.

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