REFILE-U.S. airlines align to start year with higher fares
(Refiles to make z in Travelzoo lower case in 4th paragraph)
*Fares less than 5 pct higher than year ago-watcher
*Business demand slowly returning, propping up fares
*Airline shares are higher as oil pulls back
ATLANTA/NEW YORK, Jan 7 (Reuters) - If you thought U.S. airlines would reduce fares following a laundry list of new security rules after an attempt to blow up a U.S.-bound plane on Christmas day, you would be wrong.
Rising oil prices and signs that business travelers are gradually booking more flights has emboldened some U.S. airlines to ring in the New Year with higher ticket prices.
UAL Corp's UAUA.O United Airlines instituted a $6 to $10 domestic roundtrip fare increase on Dec. 30 that was matched by other major carriers, according to FareCompare.com.
"Given the pressure on (airlines') bottom lines and if oil continues to rise, the pressure is going to be there to find additional sources of revenue," said Brian Clark, general manager of fly.com, an airfare search engine that is a unit of Travelzoo (TZOO.O).
The post-holiday period is among the most lackluster for travel companies as the reopening of schools and cold weather discourages travel. The success of fare increases hinges on whether airlines can align to prop up prices.
Clark said current fares are less than 5 percent higher than a year earlier, while Rick Seaney, chief executive of FareCompare.com, noted that some pricing is back up to pre-2008 levels.
"I don't expect prices to go up dramatically, but I do expect them to increase incrementally," Seaney said, adding that he did not expect the latest security concerns to cause as much disruption for airlines as the 2009 H1N1 swine flu outbreak, which soured demand for travel to Mexico.
Seaney said U.S. airfares reached bottom at the end of May and early June as carriers sought to occupy seats in the weak economy, while international ticket prices touched the lowest point of their declines in late July and early August.
Airlines have been encouraged by signs that business demand was recovering from the deepest recession since the Great Depression. Executives at carriers such as AMR Corp's American Airlines AMR.N and US Airways Group (LCC.N) last month cited evidence that business demand was improving.
This week, Continental Airlines CAL.N, which depends heavily on business traffic, estimated that its mainline unit revenue fell between 4.5 percent and 5.5 percent in December. In November, this measure fell 9.8 percent and in October, it dropped 15.2 percent.
"The trends are definitely up for business travel coming back," Seaney said. "But it's a slow trickle, it's not a quick jump."
Shares of major U.S. carriers rose on Thursday as oil prices pulled back. The Arca Airline index .XAL was up 2.3 percent in morning trading.
Delta Air Lines (DAL.N) shares gained about 5 percent, while Continental, UAL and AMR were up more than 4 percent in late-morning trading. (Reporting by Karen Jacobs and Deepa Seetharaman; Editing by Maureen Bavdek, Dave Zimmerman)
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