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Record oil prices mean higher fares

By wire services
Published August 12, 2005

CHICAGO - Several U.S. airlines moved to raise domestic fares by $10 to $20 per roundtrip as oil prices resumed their upward trek Thursday, reaching the highest level in more than two decades.

The hike was initiated Wednesday night by United Airlines and Delta Air Lines Inc., and followed Thursday by US Airways. American Airlines and other carriers said they were studying the move and might match.

If the increase sticks, it will be at least the eighth time the industry has raised air fares since mid February, when crude oil - the source of jet fuel - was selling for about $45 per barrel. On Thursday, the price of crude settled at $65.80 a barrel, the highest level since trading began on the New York Mercantile Exchange in 1983.

Airline travel analyst Terry Trippler predicted the latest fare boost would hold.

"When we have oil at $65 a barrel, it's got to happen," Trippler said. "Something again has to give. Even this increase is not enough to offset an additional $5 a barrel in oil, but it's better than nothing."

Members of Southwest Airlines Co.'s frequent flier program will have twice as long to earn and redeem free tickets and will no longer have to worry about blackout dates.

But those free tickets may be harder to book. Starting Feb. 10, Southwest plans to limit the number of seats available for award travel on a given flight.

Southwest officials said the changes make it easier for more customers to earn free travel.

"We want to keep the program lucrative for members, but at the same time, keep Southwest profitable," said Debra Benton, Southwest's director of loyalty marketing. "There will be a lot more people who are in the program who will now be able to earn tickets that couldn't before."

Southwest said it hopes to add a "seat finder" tool to its Web site to make it easier for customers to shop for award seats.

Travel experts said Southwest's new seat restrictions more closely align the airline's award program to those offered by its peers.

"Southwest was the only airline that didn't have seat restrictions," said Randy Petersen, editor of Inside Flyer magazine. "It's hard to pick on them when it's the industry standard."

LONDON - British Airways canceled all long- and short-haul flights due to depart from London's Heathrow airport Thursday afternoon and diverted arriving flights after an industrial dispute escalated.

The company said flights would remain grounded until at least 6 p.m. today.

Sixty-two short-haul and 44 long-haul outbound flights due to depart from Heathrow were canceled. Fourteen short-haul flights and an unknown number of long-haul flights which were en route to Heathrow were being diverted to other airports in Britain and other flights bound for London were being canceled before taking off.

The cancellations were announced after British Airways' staff joined an industrial dispute between the airline's caterer Gate Gourmet and its work force.

[Last modified August 12, 2005, 00:46:18]