Southwest blames fuel for latest fare increase

DALLAS -- Southwest Airlines Co. is raising fares by $10 for a round trip, saying it needs the money to offset higher fuel costs.

The move Friday by McCarran International Airport's busiest carrier was the latest in a series of price increases from major U.S. airlines, most of which are making money after a 2-year slump.

"In order to offset higher fuel costs that continue to face the industry, we implemented a modest systemwide fare increase of $5 one-way," said Southwest spokeswoman Ashley Dillon. She said the company was being "transparent" by increasing fares rather than imposing other fees.

Southwest had 1,276,960 arriving and departing passengers at McCarran in January, up 5.6 percent from January 2010.

Jet fuel prices have risen about 50 percent to around $2.80 per gallon in the past year. Southwest CEO Gary Kelly says fuel is the only worrisome factor in the airline's outlook for 2011.

In 2010, Southwest spent $3.6 billion on fuel, one-third of its budget and barely behind labor among the Dallas company's largest expenses.

Fortunately for airlines, the higher fuel costs come at a time when they are enjoying more power to raise prices. Passenger planes are flying at record occupancy levels because the airlines have limited new flights while travel demand has picked up.

The airlines, including Southwest, have raised fares on leisure travelers several times since December. They've also twice tried to raise fares even more sharply on high-priced tickets favored by corporate travelers -- one such increase stood, but a second attempt to boost fares by up to $120 per round trip failed this week when US Airways balked.

Fare increases can collapse if a major airline refuses to go along because other carriers fear losing customers if their prices are even a few dollars higher.