Continental Airlines pulls fuel surcharge

Mon Jan 14, 2008 2:25pm EST

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CHICAGO Jan 14 (Reuters) - A $25 each-way fuel surcharge on airline tickets was in jeopardy on Monday after Continental Airlines CAL.N withdrew its surcharge, leaving carriers that have retained theirs at a competitive disadvantage. Continental pulled the surcharge on Monday just as Northwest Airlines NWA.N was adding one, according to fare tracker FareComepare.com.

Airlines began adding surcharges to their regular fares on Friday, taking the lead from UAL Corp UAUA.O, parent of United Airlines. By Monday, all six major carriers had added comparable surcharges.

Airlines have been struggling in recent months to offset record high fuel prices through fare hikes and surcharges. But experts predict that the carriers may have a harder time passing their fuel expenses to travelers if the weakening U.S. economy erodes travel demand.

Fare hikes and surcharges require widespread matching in order to last. But fare tracker Chief Executive Rick Seaney said it is too soon to say whether Continental has spoiled this attempt.

"Normally any major legacy airline rolling back has spelled the death of an increase, but Continental Airlines has had trouble in past increases setting their fuel surcharges and at times have dropped surcharges only to reinstate them," Seaney said in an e-mailed statement.

Earlier this month, UAL initiated a fare increase that was broadly matched by competitors.

(Reporting by Kyle Peterson, editing by Mark Porter)

((Reuters Messaging: kyle.peterson.reuters.com@reuters.net; e-mail: kyle.peterson@reuters.com; Tel: +1-312-408-8581)) Keywords: AIRLINES FUEL/

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