NEW YORK (MarketWatch) -- Gerard Arpey, chief executive for American Airlines parent AMR Corp., said efforts to raise airfare enough to offset record jet-fuel prices has bumped up against the "hard realities" of a softer U.S. economy and competitive market, forcing the airline to think up new fees to add beyond the initial ticket price. "In a sluggish economy, consumers are even more sensitive to price, and when we raise fares we inevitably motivate some would-be travelers to just stay home," Arpey said Wednesday in a letter to employees. Additionally, if other airlines don't match the hike, the airline has to withdraw its increase or risk losing customers to lower-priced rivals, he wrote. "The truth is even a small difference in price almost always costs us more revenue in lost customers than we can gain by charging the higher fare. ... The goal is to wring as much revenue as we can out of every seat -- and an empty seat obviously generates no revenue at all."

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