www.bayarea.com Posted on Sat, Feb. 15, 2003 By Edward Wong NEW YORK TIMES

Three top airlines increased nearly all their fares by $10 each way on Friday.

The move, the most significant fare increase for the industry since last summer, was an effort by the companies to re-establish pricing power as fares have hit record lows. But several industry experts raised doubts that the airlines would be able to keep the higher fares. With a war in the Middle East looming, travel has continued to slump, they say, and it will only become worse if the United States attacks Iraq.

The three airlines -- Continental Airlines, American Airlines and US Airways -- will also have to see whether their other top rivals decide to match the increase. If those companies -- Delta Air Lines, Northwest Airlines and United Airlines -- do not raise their fares, then the other carriers will probably have to back down.

People in the industry are watching Northwest in particular, because it did not go along with several fare increases last year, forcing its rivals to return to lower their fares.

Continental Airlines, the country's fifth-largest carrier, was the first to put the fare increase into effect on Friday morning.

"Although the airline industry is suffering from overcapacity and weak demand, this fare increase is necessary to get Continental back on the path to financial recovery," the company said in a statement.

Continental said the increase was necessary to help offset "dramatically higher fuel expenses."

American soon matched the increase, and US Airways had jumped on board by late afternoon, said Terry Trippler, an air fare expert.

Fuel is the second-highest expense for airlines, behind labor costs. In the past year, fuel prices have spiked, because of the oil crisis in Venezuela and tensions with Iraq, said John Heimlich, an economist for the Air Transport Association, the industry's main trade group. All the big airlines have a certain amount of their fuel hedged in case of the price of oil goes up, but they have not been able to avoid paying higher prices on the average.

The spot price for a gallon of jet fuel is now $1.20, more than double the 57 cents a year ago, according to the trade group. The price for West Texas intermediate crude oil is expected to be $34.25 a barrel this month, compared with $20.65 a year ago.

In December, airlines paid an average of 77.4 cents a gallon for jet fuel, up from the 60.1 cents they paid in December 2001.

The cost of crude oil, and thus jet fuel, will almost certainly go up if the there is a war in Iraq.

Even so, there is no guarantee that the fare increase will remain, experts said. That will depend on the market conditions for air travel, which are dismal right now. Furthermore, they said, carriers with relatively good cash reserves, like Northwest, can better afford to keep fare prices lower than some of their competitors.

"The airline industry needs it," Michael Boyd, an airline consultant based in Evergreen, Colo., said of the price increase. "Whether it'll stick is another issue. With war jitters out there and other things, I don't know whether it'll stick."

www.sun-sentinel.com By Tom Stieghorst Business Writer Posted February 15 2003 Congress has approved $50 million to jump-start travel from overseas, which has been declining since the Sept. 11, 2001, terror attacks. The money, in the appropriations bill passed this week, will be divided among the 50 states according to what they spent on overseas marketing last year. Florida attracts more foreign visitors than any state other than California and could get between 10 percent and 20 percent of the money, said a spokesman for Rep. Mark Foley, R-West Palm Beach, who was a primary sponsor of the bill. "Florida's largest industry is hemorrhaging, and this may bring us one step closer to the cure," said Foley in a statement. Funds could flow as soon as President Bush signs the bill, said Foley spokesman Chris Paulitz. "This could be turned around relatively rapidly," he said. Travel to the United States will likely decline further if the United States goes to war in the Middle East. Already European visitors are favoring vacations that don't require overseas flights. Latin American travel to South Florida has been curtailed by economic problems in countries from Argentina to Venezuela. "There is nothing we need more than U.S. marketing presence in the international marketplace," said Nicki Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau. She said foreign visitors to Broward County are off 10 to 15 percent in the past 18 months. "Our Canadian business is holding steady. It's the other international, the Europeans certainly and also the South Americans," that are not coming in previous numbers, she said. In 2000, about 24 percent of Broward visitors were international. They tend to stay longer and spend more than domestic visitors, experts say. Florida attracted 6 million international visitors in 2000, according to the U.S. Commerce Department, which ranks California first with 6.4 million visitors, and New York third with 5.9 million. No other state has more than 3 million. Those figures exclude Canadian and Mexican travelers. The bill passed by Congress only included half of the $100 million Foley had sought and is limited to overseas marketing. Foley had sought to let states use the money to market to out-of-state tourists within the United States. Tom Stieghorst can be reached at tstieghorst@sun-sentinel.com or at 305-810-5008.

www.globeandmail.com By MARIAN STINSON Saturday, February 15, 2003 - Page B1

North American markets heaved a sigh of relief yesterday and stocks, bonds and the U.S. dollar rallied after UN weapons inspector Hans Blix asked for more time to determine whether Iraq has disarmed.

On Wall Street, the Dow Jones industrial average of blue-chip stocks rose 158.93 points or 2.05 per cent to 7,908.80 by the closing bell while in Toronto the S&P/TSX climbed 34 points to 6,487.13.

"Into the weekend there's a feeling that we have time to breathe and there will be no war for at least a couple of days," said Andrew Pyle, a senior economist at Bank of Nova Scotia. "It's an amazing shift in mood from Thursday," when fears of terrorist attacks and a war with Iraq triggered widespread losses, he added.

"The tone of the Blix report was so dovish that it puts the onus on the U.S. to come up with something" to justify an attack on Iraq, he said. "Now there is a sense that nothing will happen immediately."

Mr. Blix told the Security Council in New York that the inspectors found no weapons of mass destruction in Iraq but the country has not accounted for all of its prohibited weapons.

Stock prices bounced back after falling in seven of the past eight days, said Scott Kinnear, an analyst with MMS International. "Buyers were picking their spots, he added, since "stocks of some high-quality companies have been battered in the last two weeks."

News that U.S. industrial production was higher than expected last month also improved equity market sentiment, he added.

The U.S. dollar moved higher against the euro, the Swiss franc and the Canadian dollar, which fell by one-quarter of a cent to end the day at 65.66 cents (U.S.), down 0.23 cents from Thursday. The greenback strengthened to 1.0791 for each euro from 1.0832 the previous day.

Oil prices continued to climb above $36 a barrel as supply pressures persisted, not only because of the situation in the Middle East, but also as a result of the general strike in Venezuela and a pending strike by oil workers in Nigeria.

Even though a war with Iraq could be delayed, there still could be supply disruptions from there, Mr. Kinnear said.

Gold prices dropped sharply by $5.50 an ounce to $352.20 as fears of an imminent war eased.

Bond markets also shed some war fears, as prices fell for the first time in four days on the prospect that an attack on Iraq is not imminent. The 10-year U.S. Treasury issue dropped by $6.25 for each $1,000 in face value, lifting the yield by eight basis points to 3.96 per cent.

"In a week when duct tape was the hottest purchase in the U.S. and stocks were on the ropes, it's little surprise that Treasury yields fell across the board [this week]," Sherry Cooper, chief economist at BMO Nesbitt Burns, said in a commentary. The 10-year yield on U.S. Treasury bonds fell below 3.9 per cent this week for the first time this year and the two-year yield dropped below 1.6 per cent.

U.S. markets are closed on Monday to commemorate Presidents' Day.