CRISIS IN THE PERSIAN GULF : More Airlines, Including American, Hike Fares

More air carriers, including American Airlines, the nation’s largest, said Wednesday that they will raise fares from $1 to 10% of the ticket price in response to rising fuel costs.

But analysts said the real test for the industry will come after Labor Day, when travelers become scarcer and when airlines may be forced to cut fares to boost traffic. Heavy losses could result that would threaten weaker carriers, they said.

Meanwhile, truckers got permission to raise rates more quickly, and at least one railroad may increase rates next week.

Analysts were surprised that so many airlines waited so long to act, considering that they already are paying higher prices for jet fuel because of turmoil in the Middle East. At the same time, the airlines must continue to honor passengers’ discount tickets bought months ago.

“I consider it absolutely critical that the airlines pass this (fuel price increase) through as soon as possible,” said George James, chairman of Airline Economics, a Washington-based airline consulting firm. James had estimated a $500-million operating profit for the industry this year, “which isn’t very much in a $60-billion industry, but now we may see a $1-billion loss.”

The round of higher prices started last Friday when Northwest Airlines announced plans to add an $8 fuel surcharge each way to tickets. Pan American World Airways followed with plans to raise domestic and international fares 10%. Trans World Airlines said Wednesday that it would add a $20 one-way fuel surcharge to transatlantic fares starting next Wednesday.

But with industry-leading American’s announcement of a 10% increase for all fares--starting Friday for flights within the United States and to the Caribbean and next Wednesday for international flights--most other airlines are expected to also raise prices.

“We’re big, and we’re strong, but we couldn’t take the hit,” spokeswoman Mary O’Neill said, noting that the fuel price spiral could add $720 million to the airline’s annual fuel costs. “We’ve got to pass those costs along.”

Among others who announced increases on Wednesday:

* America West Airlines will boost its fares by varying amounts starting Friday. Some fares won’t change, some will go up $1 and some will rise as much as 10%, spokesman Dick Shimizu said. “The people in our pricing division are losing their minds--they’ve been very busy,” he said.

* Southwest Airlines will increase fares an average of 1% systemwide beginning Aug. 16. Some of the carrier’s low fares will remain the same, while peak fares will rise the most, spokeswoman Ann Genett-Schrader said.

* Midway Airlines said it will raise fares 10% on Friday for flights within the United States and to the Caribbean.

Delta Airlines did not announce an increase, but it warned travelers that price increases are “likely.” Among those still studying the situation were United Airlines, Continental, USAir and many smaller carriers.

Qantas Chief Executive John Ward said the Australian air carrier might increase fares by 5% in about a month.

“All of the airline pricing guys right now are in a quandary,” said John Pincavage, an analyst with Transportation Group, a New York investment banking firm specializing in airlines.

“They are very, very hesitant about wanting to raise prices because of fears of driving traffic down,” he said. But the post-Labor Day period, when the summer travel season is over, “will be a very interesting time. Then we’ll see if they will be able to hold the line on prices.”

Also, the Interstate Commerce Commission granted trucking companies permission to raise rates with three day’s notice instead of the usual seven. In addition, the California Public Utilities Commission authorized truckers to increase rates up to 10% on one day’s notice to offset rising fuel costs. Trucking companies that operate solely within California are governed by the PUC; those that ship interstate follow ICC regulations.

Santa Fe Railway said it is considering a surcharge starting next Thursday on its “intermodal” traffic, the popular shipping practice of placing truck trailers on railroad flat cars that is also known as “piggyback” shipping.