Leisure Fare Hike Collapses

Major airlines’ effort to add $20 to leisure fares collapsed for the second time in two weeks Monday after Northwest Airlines again refused to follow the hike.

American Airlines began the latest fare increase late Thursday with a $10 fare increase each way on discounted fares. Continental Airlines Inc., Delta Airlines Inc. and US Airways Group Inc. followed, with America West increasing some fares in selected markets.

But Northwest and United refused to match the hike and American repealed it Sunday to remain competitive. Other carriers did the same Monday.

“The only question left now is whether the major airlines will attempt for a third time this week to raise leisure fares,” said Tom Parsons, who watches fares as chief executive of Bestfares.com.

The news helped contribute to a broad decline Monday among airline stocks.

America West plunged 14% after the company acknowledged Friday that rivals had dropped business fares from America West’s three hubs to retaliate against the company’s recent fare restructuring. America West Holding Co. ended down 72 cents to close at $4.40 Monday on the New York Stock Exchange.

Shares of American parent, AMR Corp., fell 66 cents to $21.74; Continental was down $1.85, or more than 6.6%, to $26.05; and Delta lost 97 cents to close at $28.10. United parent, UAL Corp.’s shares were off 54 cents to $14.46 and Southwest Airlines Co. was down 68 cents to $18.25. Northwest Airlines Corp. fell nearly 5%, or 98 cents, to close at $19.16 on Nasdaq.

Earlier this month, Continental led a similar fare hike but had to rescind it after Northwest declined.

Carriers always need several attempts to make a fare hike stick, with future increases likely to be successful, said Mike Linenberg, a Merrill Lynch airline analyst.