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Air fares take off
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March 12, 1999: 4:34 p.m. ET
United, Delta and America West boost rates, Northwest holds out ... for now
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NEW YORK (CNNfn) - Some major airlines raised their fares Friday, but holdout Northwest Airlines was still on the runway.
UAL Corp.'s (UAL)United Airlines raised business fares 1 percent and leisure fares 3 percent. Delta Air Lines (DAL) and America West (AWA) quickly followed suit.
A spokesman for Northwest Airlines (NWAC), said the airline was aware of its competitors' fare increases, but it had not made any changes as of Friday afternoon.
AMR Corp. (AMR), the holding company for American Airlines, did not return calls for comment about its fares.
Some analysts have linked the fare increase to an increase in oil prices.
John Pincavage, an analyst with Warburg Dillion Read said every dollar per barrel change in crude-oil prices increases jet-fuel prices by about 2-1/2 cents a gallon.
Every penny per gallon change in jet fuel prices reduces the airline industry's operating profits by $160 million, Pincavage said.
Glenn Engel, an analyst for Goldman Sachs, said "oil prices are always a good excuse" for airlines.
"These are list prices," Engel noted. "It's just like the list prices of cars. Few people pay it unless they're pretty desperate."
The fare hikes gave a lift to airline stocks, with UAL up 3-1/4 at 68-1/4; Delta up 3-7/16 at 63-15/16 and America West up 1/2 at 17-3/4 in late-day trading. Northwest was up 1 at 25-1/2.
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