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Saturday September 9 3:00 PM ET Largest U.S. Airlines Add New Domestic Charge

By Simon Hirschfeld

NEW YORK (Reuters) - The top six U.S. airlines have added a new price hike on domestic fares amounting to $20 per round-trip ticket -- the fourth increase this year -- to counteract sky-high fuel prices, fare experts said.

The airlines are calling the increase a fuel surcharge, meaning it does not immediately show up in the posted price of the ticket, whether checked online, over the telephone with the airline or through a travel agent.

It comes on top of a previous $20 round-trip, or $10 each way, surcharge added in January. There have been two regular price hikes since then, which are included in listed fares.

In one scenario, a round-trip flight from New York to Dallas with one stopover might be listed at $248, but carry up to $62 in fees on top of the posted price, said Tom Parsons, who tracks airline fares for online travel company Bestfares.com.

That would include a total of $40 in fuel surcharges, plus passenger facility charges added to fund airports and security taxes. ``That is really going to tick off a lot of consumers,'' Parsons said.

Airlines that have added the new charge include United Airlines, American Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines and US Airways.

With each of the big six airlines matching, ``this is a done deal,'' said Bob Harrell, a consultant who tracks airline fare moves. ``You're talking about 90 percent of domestic capacity.''

Airline fares are highly competitive and increases by one or more airlines typically collapse if not matched by at least the top five or six carriers.

Southwest Airlines, the No. 7 U.S. airline and the major low-cost carrier, prices its fares differently than the other carriers, who lower their fares in markets where they compete with Southwest.

Southwest does not have a fuel surcharge in effect.

In markets where airlines compete with low-cost carriers like Southwest, not only will the surcharge be missing, the prices will be lower, Parsons said.

Fuel is the second-greatest cost for airlines, after labor, and in addition to raising prices, many partially protect themselves against fuel-price increases through hedging -- buying crude oil futures contracts or fuel at preset prices.

Crude oil futures closed at $33.60 a barrel on Friday on the New York Mercantile Exchange, down from as high as $35.40, as prices slipped from ten-year highs hit in recent days.

-- Rachel Gibson (rgibson@hotmail.com), September 09, 2000

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