ANALYSIS-US travelers may soon rebel against higher fares

By Kyle Peterson

CHICAGO, May 6 (Reuters) - The march of oil prices to record highs is causing unrelenting pain for U.S. airlines, whose attempts to balance their fuel bills through fare increases may soon meet stubborn resistance from customers.

NYMEX crude CLc1 notched a record high above $122 a barrel on Tuesday, spotlighting a crisis that left no major airline unpunished in the first quarter, when the largest carriers reported massive losses.

Air carriers like AMR Corp's (AMR.N) American Airlines and UAL Corp's (UAUA.O) United Airlines have tried to cope by raising ticket prices, mainly on domestic routes. The fare hikes help, but experts say there is a limit to how much travelers will pay for a plane ticket.

"If (oil) really does shoot up to $130, $140, $150, there's really no way that airlines can raise prices high enough to cover that cost because consumers are going to push back more quickly than they are right now," said Rick Seaney, chief executive of airline ticket research site FareCompare.com.

FareCompare data show airlines have tried to raise fares and fuel surcharges in domestic markets 13 times this year. Nine of those initiatives were broadly matched throughout the industry. Fare hikes last only when they receive industry-wide support.

In an effort to perpetuate the trend toward higher fares, airlines have been reining in their growth plans and cutting the number of seats for sale, or capacity, on domestic routes. Capacity cuts pave they way for higher fares.

In April United's capacity on North American routes fell 6.5 percent from the year-ago period. Continental Airlines Inc (CAL.N) trimmed its domestic capacity by 2.9 percent in April.

Some experts believe that mergers in the airline industry may result in capacity cuts and higher fares.