American Airlines lifts fares by $10

The move could prompt other airlines to raise ticket prices to keep pace with rising fuel costs.

NEW YORK (AP) -- American Airlines, the nation's largest airline, raised most of its round-trip domestic fares by $10 late Thursday night.
The move, one of a series of airline price hikes in recent weeks, could prompt other carriers to follow suit as they struggle to keep pace with rising fuel costs amid strong customer demand.

No airline had matched American's increase as of Friday morning, said Rick Seaney, chief executive of consumer airfare research Web site FareCompare.com.
"I fully expect matches to come (later) today or over the weekend," he said.
Markets served by discount carriers were largely excluded from American's move, said JPMorgan airline analyst Jamie Baker. FareCompare estimated about 75 percent of the carrier's domestic markets were affected; fares on some routes out of Dallas, Miami and New York were unchanged.
Seaney said it is not unusual for American to raise fares in a piecemeal fashion to gauge reaction by Southwest Airlines Co. and other competitors.
Airline stocks descend as oil prices take off "They're sort of probing," he said.
In an emailed statement, American spokesman Tim Smith attributed the increase to "continuing pressure on oil and fuel prices."
A similar move by Southwest or other low-cost airlines would be significant because it would pull up low-end fares overall, Baker said in a note to investors.
Southwest (Charts, Fortune 500) last month raised one-way fares by as much as $10, citing higher fuel costs. Competitors quickly followed with their own price increases.
"Given (Southwest's) growing affection with holiday-weekend fare increases, we remain optimistic that the industry will benefit from one more (Southwest) increase before year's end - if so, marking its sixth effort in 2007," Baker said.
Baker also said he believes American and Northwest Airlines Corp. (Charts, Fortune 500) might cut capacity by pulling larger, relatively inefficient planes out of service. Such a move would boost demand and likely put further pressure on prices.
Shares of American parent AMR Corp. (Charts, Fortune 500) jumped 1.5 percent, in midday trading on the New York Stock Exchange. Most other airline shares fell.
credited by: cnnmoney.com