Airlines may be nearing ceiling on fares

Industry faces issue of whether consumers will pay to cover fuel costs

NEW YORK – Slowing growth has led analysts to question whether airlines are going to be able to continue to raise fares to offset higher oil prices.

The busy summer travel season is in full swing, and several U.S. airlines said this week that demand for seats on already crowded planes is still strong. But with planes at or near record capacity, fare hikes are among the few ways to cover rising costs.

Higher fares on the back of strong travel demand have given airlines pricing power in recent months, which fueled strong second-quarter results. But with the economy showing signs of slowing and travelers becoming hesitant to fly because of high prices and security concerns, the pricing power and accompanying profits could quickly evaporate.