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Southwest adds fuel charge
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January 25, 2000: 2:19 p.m. ET
Carrier shuns flat fee, but hikes fares $2-$8 depending on flight distance
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Continued increases in jet fuel prices Tuesday prompted Southwest Airlines, the last holdout of recent fuel surcharges on airline tickets, to hike prices.
With the move, the nine largest passenger carriers in the United States have increased the cost of air travel in the past week as a result of higher fuel prices.
Discount carrier Southwest (LUV) is charging less than the other major carriers, which imposed $20 surcharges on every domestic roundtrip ticket.
Southwest instead raised fares $2 on each leg of a trips of up to 600 miles, $3 on trips of 601 to 900 miles, and $8 on each leg of more than 900 miles.
"We think it is a fairer method of sharing some of the cost as opposed to a surcharge," said Ed Stewart, spokesman for the Dallas-based carrier, which is the seventh-largest in the nation.
As recently as Monday it appeared that cracks were developing in the industry's position on surcharges, and some airline analysts were bracing for the quick demise of the effort.
Over the weekend, US Airways Group Inc. (U), the financially troubled carrier, dropped its surcharge, and analysts believed that could be the one defection needed to prompt others to follow and end the program.
But early Monday afternoon, US Airways re-instituted the $20 surcharge on round-trip tickets, although only on the lower-priced advance-purchase tickets typically used by vacation rather than business travelers.
An airline spokesman said the carrier had no comment on the reason for either move.
Analysts said none of the surcharges will make up for fuel prices increases that now exceed 50 percent over a year ago, but it should help blunt the costs to some extent.
"It's probably equal to about 5 to 6 cents of the per- gallon increase in fuel," said Jim Higgins, analyst with Donaldson Lufkin & Jenrette Securities. Fuel prices have gone from an average of 45 cents a gallon in the first quarter of 1998 to more than 70 cents a gallon in the current market, according to statistics from the Air Transport Association, the industry trade group.
Higgins said he wasn't surprised that low-price Southwest went with a lower-cost program than other carriers. As for US Airways' more limited surcharge, Higgins said, "It's a good way for them to get what they think they can, what they're comfortable with."
US Airways is the only major carrier to report a loss last year, and has warned analysts that it will lose money in the first quarter of 2000 as well.
In Tuesday afternoon trading Southwest shares were trading up 1/4 to 15-3/8, while US Airways' shares were down 7/16 to 23-1/8. 
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