American to Match Pan Am Fare Hikes

From Reuters

American Airlines, the nation's largest carrier, said Tuesday that it plans to raise the widely used domestic Maxsaver fares by $10 to $20 next week, matching increases announced by Pan Am Corp. last week.

"We decided late yesterday (Monday) to match Pan Am effective Dec. 16," a spokeswoman for American said.

American, a subsidiary of Dallas-based AMR Corp., plans to raise fares on the heavily discounted round-trip tickets by $10 on trips of less than 1,000 miles and by $20 on trips of more than 1,000 miles within the continental United States.

Maxsavers, highly restricted fares that require 14-day advance purchase, are used mainly by leisure travelers and are among the most popular tickets sold.

American is the first of the major U.S. airlines to precisely match Pan Am, which unveiled its fare rises last week. Pan Am startled many in the industry by boosting the Maxsaver fares soon after a round of modest increases on business fares were announced.

Both increases are designed to boost revenue in a period of slowing traffic and accelerating costs, airline analysts said. But they noted that in order to be sustained the hikes must be matched by all of the major airlines.

"Clearly having American come along is a big help," said airline analyst Paul Karos of First Boston Corp. "They are the biggest carrier, and they are seen as an important pricing player.

"But I am still cautiously optimistic about whether the increases will go through," Karos added. "The key will be Delta, they were the last to come along on the business fares, and they are enjoying a very strong business environment on their own."

Delta Air Lines Inc., USAir Group Inc., NWA Inc.'s Northwest Airlines, UAL Corp.'s United Airlines and Texas Air Corp.'s Eastern Airlines and Continental Airlines units all said they are studying the American and Pan Am moves.

Trans World Airlines Inc. last week countered Pan Am's move with an even more aggressive fare hike, saying it planned to raise Maxsavers by $10 on domestic flights of less than 750 miles and by $30 on flights of more than 750 miles.

None of the carriers has responded to TWA's initiative.

Airline pricing executives have said they did not expect any decision on the Maxsaver increases until after the planned $5 to $8 increase in domestic business fares goes into effect Friday.

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