UPDATE 1-UPS raises 2010 rates by 4.9 percent

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CHICAGO Nov 20 (Reuters) - United Parcel Service Inc (UPS.N), the world's largest package delivery company, said on Friday that it plans to raise air and ground freight rates by an average 4.9 percent in 2010.

The company also said it planned to change its fuel surcharges in an effort to "decrease fuel surcharge volatility when fuel prices fluctuate."

In September, UPS's chief rival, FedEx Corp (FDX.N), announced a 3.9 percent increase in air freight rates for 2010. It has not yet announced its new ground rate schedule.

Last year, UPS announced air rate increases of 4.9 percent and ground rate increases of 5.9 percent as the world economy sank into recession and freight volumes plummeted.

And while its first-quarter profit missed expectations because of that freight falloff, subsequent quarters have pleased Wall Street, in part, because of what UPS says has been the maintenance of rational pricing in the industry despite the slump.

(Reporting by James B. Kelleher; Editing Bernard Orr)