UPDATE 2-United Airlines raises fares to offset fuel costs

(Adds responses from rival airlines, share price)

CHICAGO, Jan 4 (Reuters) - UAL Corp (UAUA.O), parent of United Airlines, said on Friday it raised fares throughout its route system to offset "unprecedented fuel costs," a price increase likely to be matched by rivals, one analyst said.

UAL said the hike, which took effect on Thursday evening, boosted fares by $5 one-way for flights less than 1,500 miles and $10 one-way for flights over 1,500 miles.

The increase by the No. 2 U.S. airline marks the first major fare hike of 2008. It was unclear whether rival carriers would match UAL's move. In order for a fare hike to last, it must receive matching increases by competing carriers.

"This (fare) increase is most likely going to be matched quickly and will probably be the first in a continued wave of increases spurred by the rising cost of fuel coupled with a continued reduction in U.S. domestic seat supply," said Rick Seaney, chief executive of fare tracker FareCompare, in a research note.

Seaney said low-cost carrier AirTran Airways (AAI.N) raised fares by $5 one-way. So far on Friday, no major carriers said they had matched. AMR Corp (AMR.N), parent of American Airlines, and Northwest Airlines NWA.N said they were evaluating the increase.

Seaney said the airline industry saw 17 successful system wide fare hikes in 2007 out of 23 attempts.

Many experts have predicted that airlines would have difficulty extending the trend toward higher fares amid predictions of weakening travel demand.

That outlook combined with soaring energy prices puts airlines in a precarious position as they struggle to build on a recovery that started in 2006.

Nymex crude futures CLc1, which dictate the price of jet fuel, notched a record above $100 a barrel this week.

Airline shares were broadly weaker, with the Amex airline index .XAL down 3.6 percent. Shares of UAL were down 4.63 percent at $30.28 on Nasdaq. (Reporting by Kyle Peterson; Editing by Derek Caney)