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United Airlines Attempts to Raise Airfares But Fails

Travelers Today       By    Katie McFadden

Updated: Jan 07, 2013 04:33 PM EST

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United Airlines and other airlines tried to raise airfares for the New Year, but they failed.

When the New Year began, United and partner Air Canada increased fares by $2 to $5 each way on all of its flights. They implemented the increase on Thursday but they have since backed down on the increase, USA Today reports. They are keeping a $10 one-way increase on flight to Hawaii and Alaska.

Delta Air Lines also increased their fares but Southwest Airlines did not. Airline fare increases tend to stick when Southwest jumps on board.

"We would identify Southwest's inaction as the catalyst behind the industry's failure to raise fares," Jamie Baker, an airline analyst with JP Morgan told USA Today.

Delta also backed down on its fare increase.

Despite the airfare hikes failing right now, that doesn't mean airlines won't try it again in the near future.

"Given continued industry supply discipline, particularly in the first half of 2013, we expect a continued inching up of domestic fares in coming months, accompanied by an overall reduction in promotional sale activity," Baker told USA Today.

American Airlines was still deciding whether or not to raise its fares after United first raised it.

In 2012, airlines attempted to raise their fares 15 times but only seven of them stuck.

"It often requires several attempts to reach industry consensus, and no individual failure should be viewed as a 'lack of pricing power," Baker said.

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