Continental, American raise airfares to cover fuel costs CHICAGO (Reuters) =97 Several major U.S. airlines Friday raised airfares $10= =20 each way effective immediately, in an attempt to counter steep fuel price=20 increases that threaten an already struggling industry. Continental=20 Airlines Friday became the first major airline to raise fares to cover=20 rising fuel costs. American Airlines, a unit of AMR, quickly matched the=20 increase. It was not immediately clear if other major airlines would do the= =20 same. Fuel is one of the highest and least predictable costs facing=20 airlines. In the past, airlines have added what they called temporary fuel= =20 surcharges. Major airlines lost more than $11 billion in 2002 following a=20 downturn in travel after the Sept. 11 attacks. UAL's United and US Airways= =20 have sought bankruptcy protection and other carriers may follow.=20 Continental, the No. 5 U.S. air carrier, said the increase applied to all=20 domestic and international flights. The airline spends more than $1 billion= =20 a year on fuel and those costs have risen rapidly with the run-up in crude= =20 oil prices. "Although the airline industry is suffering from overcapacity=20 and weak demand, this fare increase is necessary to get Continental back on= =20 the path to financial recovery," Continental said in a statement.=20 Airfare-watchers said it was only a matter of time before airlines looked=20 to pass the fuel costs on to passengers. They expect others to match the=20 Continental increase in some way. "It gives carriers no choice but to implement fare increases at a time that= =20 traffic is already soft," said Joseph Schwieterman, a transportation expert= =20 at DePaul University in Chicago. "Other carriers have a strong incentive to= =20 match Continental's increase, including the discount airlines." Crude oil=20 prices stood at more than $36 a barrel Friday, though prices have seesawed= =20 with each development in the dispute between the United States and Iraq.=20 "You only have to drive by the gas station and see what is happening to=20 fuel prices," said Terry Trippler, airfare advocate at CheapSeats.com. "I=20 believe it is justified, though I would prefer a fuel surcharge that could= =20 be removed. You can't expect the airlines to absorb that fuel increase."=20 U.S. airlines typically hedge some of their exposure to fuel price swings,= =20 but that process can be very tricky and not all carriers have access to=20 markets necessary for hedging that exposure because of financial straits.=20 "The dual effects of war-induced travel downturn and a spike in fuel prices= =20 could be a recipe for more Chapter 11 filings," Schwieterman said.=20 Continental said Thursday it expects to post a significant loss in 2003=20 because of slack revenue and high fuel costs. It also said that without=20 improvement in the current air travel downturn, the airline will not be=20 able to support its current size or cost structure beyond 2003. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.boogsie.com/ TnT Webdirectory: http://search.co.tt *********************************************************