DALLAS -- United Continental Holdings, the world's biggest airline company, scrapped its 2011 growth plans on Monday and said it will cut unprofitable routes because of rising fuel prices.
The airline also said it may remove less fuel-efficient planes from its fleet.
United said the amount of flying it does this year will remain about the same as last year. It had previously planned to grow as much as 2 percent.
Fuel has become the largest single expense for most airlines. Flying less is one way they can offset it. Raising fares is another -- and they've been doing that aggressively.
Over the weekend, Southwest Airlines joined a $10 increase started by other airlines on many domestic round-trip fares. Southwest's increase may have ensured success for a price hike by major airlines that seemed to be faltering. Southwest carries more U.S. passengers than any airline and wields great influence over prices.
It's the sixth time airlines have raised fares this year. FareCompare.com CEO Rick Seaney says leisure travelers may now have to pay $260 for a ticket that cost $200 on Jan. 1.
The airlines say they need the money.
"Fuel prices are up every week and the fare increases aren't keeping pace with fuel cost increases," said Southwest CEO Gary Kelly.
Kelly said Southwest is on pace to spend $1.3 billion more on fuel this year than last year. That's nearly triple the airline's
Kelly doesn't think higher fares are driving away customers. Southwest reported Monday that February traffic, measured in miles flown by paying passengers, jumped 13 percent from the same month last year. However, United Continental traffic fell 1.1 percent for the month.
Jet fuel prices have risen more than 50 percent in the past year to more than $3 a gallon, although most airlines have offset some of the increase through hedging -- in effect, paying extra to lock in the top price they'll pay for some of their fuel.
The latest price increase started early last week. Delta Air Lines tried to raise many fares by up to $20 per round trip, but other big airlines sided with a $10 increase started by American Airlines.
Southwest waited three days before matching American's move on Friday night. Other airlines had rolled back fare hikes on routes where they compete with Southwest and other discount carriers, but they revived the full increase once Southwest raised prices too, Seaney said.
Low-cost airlines JetBlue, AirTran and Virgin America also raised prices, virtually assuring that the increase will become permanent, he said.
There were only four broad price increases in all of 2010, and two of those occurred in December. The flurry of fare hikes so far this year mirrors the rapid rise in fares and fuel surcharges in early 2008, when oil prices were heading toward record levels.