By David Bailey CHICAGO, March 13 (Reuters) - U.S. airlines are trying to drum up business for the peak summer travel season through sales on fares in some markets, but tickets may cost more in other places as they try to boost revenue, analysts said. The critical peak summer travel season has taken on more significance than ever for a U.S. airline industry that reported billions of dollars in losses last year in the travel and business downturn following the Sept. 11 attacks. Fares on average have risen gradually since the attacks, but average U.S. domestic fares were still sharply below a year ago in January, according to the latest monthly data available from the Air Transport Association, an industry trade group. Fare ads, always a mainstay for the industry, are popping up in major newspaper and television outlets nationwide. But revenue generated from these fares still falls short of covering high fixed costs, airplanes and labor for most airlines and a mere gradual recovery in demand for air travel may not be enough to make the carriers profitable, analysts said. MAJOR AD CAMPAIGNS Carriers have offered a hash of deals designed in some cases to address expected weakness in some markets or to match the fares low cost carriers offer on routes between large U.S. cities, analysts said. "There are some pockets were the airlines would like to move some seats," said Terry Trippler, a consultant at Trippler & Associates. "Don't hyperventilate (as a consumer) over a sale because it probably isn't that big of a deal." Delta Air Lines (DAL) on Wednesday offered round-trip fares as low as $268 from Boston to San Diego or Atlanta to Orange County, California, with various restrictions for travel from April 1 to June 7 on the No. 3 U.S. carrier. America West Airlines (AWA) on Monday said it offered fares as low as $149 each way between Phoenix and New York's Kennedy International Airport with various restrictions. United Airlines (UAL) has started a major national advertising campaign in newspapers and television that will reemphasize its current fares. The carrier expects to spend more on advertising in the first half of 2002 on a percentage basis than it has in each of the past five years. US Airways (U) cut fares by hundreds of dollars round-trip from April through June 7 to the Caribbean to address an expected soft period following Spring break, said Tom Parsons, chief executive of Bestfares.com. Southwest Airlines (LUV) lowered fares on some coast-to-coast routes through August 3 and major carriers have matched fares on those specific routes, though not necessarily for as long as Southwest has them scheduled, Parsons said. THREE-STEP RECOVERY The U.S. government predicts air traffic will return to pre-Sept. 11 levels next year, according to figures released by the Federal Aviation Administration on Tuesday. According to Salomon Smith Barney airline analyst Brian Harris, recovery is a three-step process for the airlines, starting with raising the percentage of capacity in use to year-ago levels. They met the first step with schedule cuts and fare discounts. Having restored load factors, the airlines now need to push yields higher by raising unit revenue, also known as revenue per available seat mile, then ultimately restore capacity, Harris said. To meet those goals, airlines must lower business fares and raise leisure fares. "Airlines are mixing steps two and three a little bit," Harris said. "I would prefer to see yields grow more before airlines make bets on capacity, but they haven't made any big bets on capacity yet." Most large hub carriers cut capacity about 20 percent after the attacks and are restoring capacity at about 3 percentage points per quarter, Harris said. Airlines appear to be narrowing the gap between business and leisure fares, albeit slowly, Trippler said. At the end of the year, leisure travelers are likely to find they paid a little more in 2002 than in 2001 and business travelers a little less, he said. SOME FLIGHTS RESTORED United Airlines on Tuesday said it would add more than 100 flights daily starting June 7 for the summer and recall a number of employees, though its schedule will remain below year-ago levels. United added 127 flights daily in April. America West said on Monday that it plans to restore 23 flights cut at its Phoenix hub following the attacks and add 23 flights to other markets for the summer. Last week, American Airlines (AMR) tried to lengthen advance purchase requirements to boost yields. The world's largest carrier previously announced plans to add flights for the summer travel season. Business travel cutbacks in response to a weak U.S. economy hurt airlines last year before the attacks, Bestfares.com's Parsons said. Leisure travelers saved the airlines then and may continue to for some time, he said. "They (leisure travelers) are the cheap dates," Parsons said. "But the business traveler, I don't see them coming back until the stock market reacts. If there is any hope for the business traveler, it is in 2003, not in 2002." ©2002 Reuters Limited.