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United raises fares by 3 percent
American also announces rate hikes on domestic and international flights on higher fuel costs.
June 22, 2005: 2:15 PM EDT

NEW YORK (CNN/Money) - United Airlines added itself to a growing list of airlines instituting fare hikes on domestic and international flights Tuesday, citing concerns over the rising cost of fuel.

The 3 percent rate increase, which goes into effect immediately, is an effort on the part of the company to combat high oil prices, say company officials.

"With oil continuing to trade at historically high levels, all industries must act responsibly to offset rising fuel costs," said John Tague, an executive vice-president with United, in a statement. "We are confident our customers will understand that we must take appropriate measures to mitigate our higher fuel costs."

While United noted that sale and contracted fares will not be affected, most domestic and international flights will experience an average of a 3 percent increase.

Competitor American Airlines announced their own rate increase Tuesday evening on all domestic flights within the 50 states, also over rising fuel cost concerns, said a company spokesperson.

"At this point, the high cost of fuel is definitely the motivation for increasing fares to try to compensate for extreme increases in costs," said Tim Wagner, a spokesman for American Airlines, noting that the carrier will spend at least $1 billion more on fuel in 2005 than in 2004.

Wagner said American customers can expect to pay an additional $5 for a one-way ticket and an additional $10 for round trip excursions. Last week, American matched Delta's $10 fare increase on all trans-Atlantic flights.

A spokesperson for Delta confirmed that the additional fees were implemented to cover fuel costs.

Phone calls to Continental were not immediately returned.

Terry Egger, a vice-president at Air Fulfillment Services, a company that negotiates airfare contracts, is confident that the rate hikes won't last, since these increases by United, American and Delta come on the cusp of the slow fall travel season.

"We're now at the end of June heading into a slower season and there's going to be fare wars before there's fare increases in my book," Egger said.

United is currently operating under Chapter 11 bankruptcy protection and is trying to reach agreements with its unions to lower labor costs.

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