Southwest Raises Fares, Other Big Airlines To Follow

Discount leader Southwest Airlines (LUV), which uncharacteristically raised its fares six times in 2006, raised them again Monday by as much as $10 each way for its longest flights. The carrier's first price increase of 2007 follows a $2 and $3 price increase implemented just before New Year's. Monday's increase was quickly matched by American, Continental (CAL) and Northwest (NWACQ). Each of the three airlines had led or participated in failed efforts to increase prices industry-wide in the past three weeks.

Other big airlines also were expected to follow, because Southwest, with its industry-leading low costs, typically sets the floor for prices in the markets it serves. Southwest is the only carrier to report profits in every quarter since the Sept. 11 attacks, but it faces increasing pressure to raise revenue.