Southwest, JetBlue to Boost Fares

Southwest Airlines Co. and rival low-cost carrier JetBlue Airways Corp. said Wednesday that they planned to increase fares this year to help cover higher fuel costs.

JetBlue Chief Executive David Neeleman said the New York-based carrier needed to raise fares by an average of $5 to $10. JetBlue had its first loss as a publicly traded company in the fourth quarter.

Southwest has said its fuel costs will rise by $600 million this year.

The Dallas-based airline, which hasn’t experienced a quarterly loss since 1991, said fuel costs would rise this year because of a reduction in the percentage of its fuel needs covered by hedges, financial instruments used to help flatten price spikes.

A 30% increase in fuel prices in the last year is making it tougher for Southwest and JetBlue to offer lower fares to lure passengers.

The two carriers are confident they can raise prices without losing customers because Chapter 11 bankruptcy filings by Delta Air Lines Inc. and Northwest Airlines Corp. have left travelers with fewer alternatives.

“We’re going to have to see revenue improvement to cover those fuel costs,” said Laura Wright, Southwest’s chief financial officer.

Southwest also is looking for ways to reduce costs and increase efficiency, “but we’re pretty lean and you can’t get there on the cost side alone,” Wright said.

Southwest raised fares across its system three times in 2005 and in select markets twice. This year, it raised prices in some cities Jan. 27, said spokeswoman Linda Rutherford.

JetBlue is moving workers from offices in Salt Lake City and Darien, Conn., to its New York headquarters to better coordinate fare management, route planning and flight scheduling. JetBlue has said it will post losses for this quarter and all of 2006.

Shares of Southwest rose 14 cents Wednesday to $16.83. JetBlue fell a dime to $11.06.