This weekend  Southwest Airlines  raised the majority of its fares by $1 to $10, one-way.

As most of you are aware — whenever Southwest raises its fares — it’s usually a bigger deal than the usual legacy airline increases. Why? First, because almost immediately the legacy carriers jump up and down in a frenzy, matching any Southwest increase as soon as possible.

Secondly, as JP Morgan analyst Jamie Baker points out in a note this morning, most of the airlines’ domestic revenue comes from markets where legacy carriers compete with the discount airlines. Not those Ithaca to Pittsburgh runs. As a result, when Southwest ups its fares — everyone notices.

Or, as Baker said, “This One Matters – We have grown increasingly wary as to benefits of continued Legacy-only fare efforts given, well, they don’t really seem to be helping all that much (i.e. dozens of fare increases have translated into LOWER domestic prices for consumers, in large part due to perpetual sales). Fare efforts that lack Discounter participation simply don’t pack much RASM punch, as the industry generates significantly more revenue in Discounter markets than, say, between White Plains and Oxnard. However, when Southwest chooses to push fares higher, we do sit up and take notice and expect the market to do the same.”

This will be Southwest’s fourth major fare increase for the year. The airline pushed through five major fare increases in 2006.

The fact the airline is raising fares bodes well for future revenues. The news also comes after both Continental and US Airways voiced positive RASM news about June — in their traffic reports last week.