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After $20 increase, air fares fall

Most major airlines lowered round-trip ticket prices by $20 Monday despite high fuel prices, a move that could signal softer demand for travel.

American, United, Continental, Delta and US Airways reduced fares on thousands of flights, according to Graeme Wallace of FareCompare.com, a Dallas firm that tracks airline-ticket prices. The airlines had raised prices by $20 over the weekend, hoping to offset mounting fuel costs.

Fort Worth-based America had been the first to roll out the price increase, late Friday. But Northwest Airlines declined to match the higher fares, which ultimately forced the rest of the airlines to rescind the increase.

"This marks the first unsuccessful hike in airfare prices since Delta's failed attempt to add $10 in fuel surcharges at the end of March," Wallace said. "With six successful increases in the last two months, this could be the first sign that demand is softening."

It was the 17th time that the airlines have broadly raised prices this year. The increases have been rescinded five times.

"Airline customers are very price-sensitive," said American spokesman Tim Wagner. "We could not afford to be at a price disadvantage to other airlines that had not raised fares."

Discount carrier Southwest Airlines, based in Dallas, typically does not participate in broad price increases.

Despite the gradual increase in prices, higher fares haven't come close to compensating airlines for the increased cost of fuel. The airlines are expected to pay $20 billion more this year than last year for jet fuel, according to the Air Transport Association.

That's why many airlines are beginning to hit passengers with new fees and charges for a host of services, ranging from checked bags to reserving an aisle seat. Such fees are typically not listed in the base fare when customers book travel.

Shares of AMR Corp., American's parent (ticker: AMR), closed at $6.85

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