American Airlines’ Fare Hikes to Be Matched by 3 Competitors

At least a temporary split on pricing developed Thursday in the U.S. airline industry as three major carriers matched fare increases announced Wednesday by industry leader American Airlines, but a number of others--including No. 2 United Airlines--held out.

Delta Air Lines, Continental Airlines and Trans World Airlines all said they would raise their fares along the lines of the American increase, which is scheduled to take effect Sept. 29. But United, USAir, Eastern Airlines and Northwest Airlines all said they were still studying the fare action.

“I think all of the industry would like to boost fares now, but it is a question of how much they can push at this time,” said John Mattis, an airline analyst with Shearson Lehman Hutton.

Mattis said he was not sure if the airlines now holding the price line will eventually join the increases. “I would not be surprised if the others hold out right now--or put in for a smaller increase,” he said.

Other industry observers said it is possible that the remaining holdouts have been slow to make their decisions so they can see what action competitors take. They speculated that some may impose smaller increases than those announced by American, Delta, Continental and TWA and that those four may then be forced by competitive pressure to reduce theirs.

Even American conceded Thursday that its increases are not set in stone.

“We have no intention of making any changes in our new fare schedule,” said Alton W. Becker Jr., an American spokesman. But he added that the Dallas-based carrier was “monitoring the competitive situation.”

In announcing its fare hikes, Delta cited rising operational costs, including a sharp jump in fuel prices. Whit Hawkins, the Atlanta-based airline’s senior vice president, said Delta “has not implemented a general fare increase for these type fares since the spring of 1988.”

Hawkins said in his statement that more than 6 million seats, or 65.5% of Delta’s total seats in August, were offered for sale at deeply discounted, non-refundable fare levels, an increase from 43.4% from the number of seats available at those discounts in the same month a year earlier.

Fares Non-Refundable

Vince Martinelli, a pricing executive at TWA, said that “the industry needs some higher fares. Yields (the average amount of revenue received for carrying one passenger one mile, expressed in cents) were soft during the summer. Therefore, we need higher revenues. I am sure the other carriers experienced similar soft yields.”

Under the new American fare schedule, the cost of a trip of less than 1,000 miles--with a 14-day advance purchase--would rise $10 round-trip. For journeys of more than 1,000 miles, the boost would be $20 round-trip. These fares are non-refundable.

American also plans to raise the price of its seven-day advance fares by between $30 and $60 round-trip. The penalty for changing or canceling a seven-day advance reservation would double to 50% of the ticket price.

The increases announced Thursday by Continental, Delta and TWA closely paralleled American’s.