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Air travel gets pricier
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April 9, 1999: 4:30 p.m. ET
Continental, Delta, United and America West hike leisure and business fares
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NEW YORK (CNNfn) - Continental Airlines on Friday introduced a 3-percent increase in its leisure fares and a 1 percent increase in its business or nonrestricted fares, and a few other airlines followed suit, including Delta, United and America West.
Salomon Smith Barney's Brian Harris said it is hard to tell how the fare hike will play out, adding that airlines match their fares at one of three points in the day: morning, afternoon and evening. At this writing, Northwest and U.S. Airways said they have not imposed fare increases, and calls to American Airlines were not returned.
A company spokesperson for Southwest told CNNfn that the airline has not and will not raise its prices.
Federal law prohibits airlines from giving advance notice of fare hikes. So they tend to be imposed on Fridays or Saturdays because fewer people buy airline tickets over the weekend than at the beginning of a week, and an airline that gets out front with a price increase "takes less risk by going out on a limb" and possibly losing customers who choose cheaper fares, said Glenn Engel of Goldman Sachs.
If the industry adopts higher fares across the board, it will be the third time this year. Airline prices rose at the end of January and in mid-March.
But, Engel said, the hikes apply to sticker price and most people buy tickets when there is a sale. So it will be hard to tell if the average price of a leisure fare goes up until one sees the size and number of promotional sales launched in the coming months. What airlines are trying to do is structure fares to maximize price, Engel said, "but higher fares don't necessarily accomplish that."
Investors in transportation stocks appeared pleased with the fare hikes. By late afternoon, shares in Continental (CAI.B) were trading higher by 2-11/16 at 40-1/2 and Delta (DAL) stock was up 3-7/8 at 71-3/16. Shares in UAL Corp. (UAL) were up 3-3/16 at 80-1/4, while those in America West (AWA) rose 1/16 to 19-13/16. 
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