United Air Sees Fare Gains as Cheapest Tickets Become Scarce

(Bloomberg) -- United Continental Holdings Inc. is seeing improved average airfares as U.S. rivals offer fewer bargain-basement ticket prices.

“It’s not really that fares have gone up much, it’s that the $25, $30 fares that were prevalent a year ago are much more narrow today,’’ United President Scott Kirby said in an interview Tuesday.

The improvement is helping United weather higher fuel costs, Kirby said. The No. 3 U.S. carrier is also benefiting from robust business demand and consumers feeling “pretty flush,’’ he said at the Boyd Group’s International Aviation Forecast Summit in Denver.

“Both the pricing and the demand environment have just gotten stronger as we’ve gone through the quarter,’’ Kirby said. “As fuel prices have gone up, the pricing environment has changed.”

United advanced less than 1 percent to $85.66 at the close in New York. The shares have climbed 27 percent this year, the most by far on a Standard & Poor’s index of the five biggest U.S. airlines.

Partnership Talks

The Chicago-based carrier continues to work on forging a joint venture in Latin America with Avianca Holdings SA, Copa Holdings SA of Panama and Brazil’s Azul SA, Kirby said.

United owns 8 percent of the Brazilian airline, which was established by David Neeleman, the co-founder of JetBlue Airways Corp. That partnership, if completed, would help the carriers better compete with American and Latam Airlines Group SA.

“I think we’ll get there,” Kirby said in an interview, citing market volatility as one hurdle that makes the negotiations more complex.

“It’s just complicated to get a big deal done with lots of parties,” he said.

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