Gary Kelly, vice chairman and CEO of Southwest Airlines Co., is seen in this October 2006 file photo. The low-cost airline led a fare hike by raising prices on the weekend. - AP

A US$10 fare hike by South-west Airlines Company has triggered matching increases by rivals as the industry struggles to offset soaring fuel prices and build on a recovery that began last year.

Early yesterday, oil prices climbed to US$75 as Hurricane Felix built to Category Five strength.

Southwest, the leading United States low-cost carrier, yesterday said it raised one-way fares over the weekend.

AMR Corp's American Airlines, UAL Corp's United Airlines, Northwest Airlines Corp, and U.S. Airways Group all said they matched Southwest's move.

Other airlines weren't immediately available for comment.

U.S. airlines have initiated several revenue-boosting fare increases this year, but many attempts have failed due to a lack of matching by low-cost airlines like Southwest.

Southwest has long been the biggest obstacle to fare hikes because its well-hedged fuel consumption makes it less vulnerable than competitors to spikes in oil prices.

But as the carrier's below-market hedges expire, the airline is losing that cost advantage and musthike fares to compensate.

"It is increasingly evident that if we are to count on higher oil prices, we can count on Southwest pushing fares higher," said JP Morgan airline analyst Jamie Baker in a research note.

Southwest increased fares on flights of over 1,250 miles US$10 each way effective August 31, while it raised tickets on select short and medium-haul routes by US$1, US$3, and US$5 each way, company spokeswoman Beth Harbin said.

Baker noted that U.S. Airways and Alaska Air Group benefit more than other airlines because an estimated 35 per cent to 40 per cent of their revenue is derived in markets where Southwest leads pricing.

- Reuters