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United, others raise fares to cover fuel
Carriers say hikes are unavoidable; some customers doubt the increases will hold.
June 23, 2005: 9:03 AM EDT

NEW YORK (CNN/Money) - United Airlines, citing rising fuel costs, has joined a growing list of airlines that have hiked fares on domestic and international flights.

The 3 percent increase, effective immediately, is an effort to combat high oil prices, company officials say.

"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 rise of 3 percent.

On Tuesday evening, competitor American Airlines announced their own rate increase for domestic flights within the 50 states. An American spokesperson also cited rising fuel expenses.

"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. He noted 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.

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 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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Click here for CNN/Money's special report -- "Oil Crunch 2005."  Top of page

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