Continental Floats Another Fare Increase

Continental Airlines Inc. Friday raised round-trip domestic air fares by up to $40, the third increase in the past six months and one of the sharpest across-the-board fare hikes in recent memory.

But no other U.S. airline had followed Houston-based Continental’s lead by Friday afternoon, putting the fare hike’s staying power in doubt.

The carrier cited higher fuel costs in boosting domestic round-trip fares by $20 on flights of up to 500 miles, by $30 on flights of up to 1,000 miles, and by $40 on flights of more than 1,000 miles. One-way fares will rise by $10, $15 and $20, respectively.

Continental’s move follows a recent industrywide $20 fuel surcharge on domestic round-trip fares on top of a $20 round-trip fare hike last October.

Fuel prices remain at historically high levels, threatening airline profits, but several recent attempts by airlines to raise fares have failed.

All Continental domestic routes are affected by the new fare hike, said Tom Parsons, who tracks airline fares for the online travel company Bestfares.com.

“This is the biggest fare hike in history,” Parsons said.

Both Parsons and Terry Trippler of 1Travel.com pointed to Northwest Airlines Corp. as a possible spoiler to the new Continental hike by refusing to go along and perhaps dooming the increase.

“We know if this one does not fly--and the big spoiler could be Northwest--they’ll just try it again next week,” Parsons said.

“I would have expected Northwest to match by now,” Trippler said Friday afternoon. “My gut feeling is they’re not going along this time.”

Other airlines, seeing that Northwest failed to match, may be saying “Why bother?” Trippler added.

Oil recently rose above $34 a barrel, a nine-year high, although it has fallen back since then as major oil-producing nations appeared to relent on their tight rein on production. April crude on the New York Mercantile Exchange ended Friday at $31.76, up 7 cents.

Despite recent fare increases, airlines remain embroiled in a fierce fare war taking place almost exclusively on the Internet, where consumers can still find bargains, Parsons said.

America West Airlines, US Airways, Southwest Airlines, United Airlines, Delta Air Lines and Northwest are all offering coast-to-coast flights for $198 round-trip, for instance, with some restrictions.

In trading Friday, Continental shares rose $2.56 to $35.19.