Continental Fails at 2nd Try in 2 Months to Raise Air Fares

Continental Airlines Inc. on Monday failed in its second attempt in as many months to raise air fares in the face of rising fuel prices, as competitors withdrew matching increases.

Continental dropped the increase of as much as $40 round trip after Northwest Airlines Corp. withdrew plans to boost fares on some routes. Northwest’s action was enough to persuade Delta Air Lines Inc. to drop out, followed by America West Holdings Corp. AMR Corp.’s American Airlines withdrew the increase on some routes.

Separately, the world’s largest travel reservation company, Sabre Holdings Corp., began offering discounted airline fares that are available on some carrier Web sites to travel agencies to boost sales.

Sabre’s debut of its clearance fare site comes two days before it will be spun off from AMR, which owns 83% of the Fort Worth-based reservation company. Sabre will be included in the Standard & Poor’s 500 index after the close of trading Wednesday.

Consumers will have access to the fares through the 47,000 travel agents that belong to Sabre’s electronic network and through the Web sites of participating airlines. The rates also will be available in coming weeks through Sabre’s corporate travel system. The move lets Sabre benefit from more sales of discounted unsold airline seats and other ticket promotions.

Sabre shares fell $1.94 to close at $45.81, and AMR rose 44 cents to close at $57.31, both on the New York Stock Exchange.

Travelers, meanwhile, got a break Monday when Continental rescinded a fare hike it sought to implement Friday. The Houston-based airline withdrew another attempted increase last month after Northwest failed to join, although it succeeded in adding $20 to round-trip fares in January. Continental declined to comment.

Northwest, the fourth-largest U.S. carrier, offered no explanation for reversing the increase.

American Airlines withdrew the increase on U.S. routes out of Minneapolis, Detroit, and Memphis, Tenn., which are Northwest’s main hub cities.

Continental shares fell 50 cents to close at $34.50 on the NYSE, and Northwest declined 56 cents to close at $17.19 on Nasdaq. Delta rose $1.56 to close at $49.38, also on the NYSE.