Jet fuel prices have doubled in the last two months, and although ticket prices have increased moderately so far, this is expected to change in the coming months, writes CNN.
"We are seeing prices for the summer season rising due to more expensive fuel," she said. Hayley Berg, chief economist at travel booking site Hopper. “Domestic flight prices for the summer have increased by about 10 percent, driven by higher fuel costs.”
Higher fares aren't the only way flying will become more expensive. Travelers can also expect fewer cheap flights and more additional fees as airlines try to offset the huge increase in operating costs.
Ticket prices
However, airlines cannot simply raise fares to cover higher costs such as fuel. Fares are primarily based on the demand for travel and the supply of available seats. “The more they raise fares, the fewer people will fly. Or they will choose to travel by car,” he said. Zek Grief, author of the aviation newsletter From the Tray Table.
Fuel is a huge expense for airlines, accounting for about 20 to 30 percent of their total costs, second only to labor costs, according to financial reports. Delta Air Lines said fuel cost it $400 million more in March than it did in the same month last year.
United Airlines CEO Scott Kirby told employees in March that if fuel prices remain at current levels, the company will cost an additional $11 billion this year. “To give you an idea, in our best year ever, we made less than $5 billion,” he added.
United would have to raise fares by 20 percent to cover the entire fuel price hike, he told Bloomberg, but that would reduce demand. So airlines are finding other ways to pass the cost on to consumers. JetBlue just announced a $10 increase to most baggage fees, citing “rising operating costs.”
Capacity reduction
Grif believes other companies are likely to follow suit. “We recognize that raising fees is never an ideal solution, but we make such changes thoughtfully and only when necessary,” JetBlue said in a statement released this week.
Airlines can also save money by cutting less profitable flights, which can also increase costs for passengers. United has announced that it will reduce flight capacity by about 5 percent over the next six months, which includes the key summer season. Other companies are also quietly reducing their schedules, Griff said.
United's Kirby told employees that the capacity reduction is preparation for a scenario in which the price of crude oil remains above $100 per barrel through the end of 2027, reaching as high as a record $175.
That's why it's cutting lower-cost flights that travelers use to find bargains, such as night flights and flights on Tuesdays, Wednesdays and Saturdays. "Passengers who fly for pleasure have a lot to lose with this capacity reduction, not only because of less choice, but also because of higher ticket prices," Grif said.
Demand remains strong despite everything
Despite all this, demand for air travel remains strong. This means that airlines may have plenty of room to raise fares further. Over the past month, several airlines have reported record bookings to investors.
The recent surge in gasoline prices could further boost demand. The average price of gasoline this week topped $4 for the first time since 2022. For some Americans, driving long distances could become more expensive than flying.
“We are well positioned to do everything we can to offset that spike in fuel prices,” Delta Air Lines’ CEO told investors last month. Ed Bastian, noting that the five days with the highest sales in the company's history occurred after the start of the Iran war.
Impact on the economy
He added that some companies have already raised prices, but history shows that it takes two to three months for fare increases caused by a fuel price spike to fully materialize. However, if gasoline prices continue to rise, it could hurt overall travel demand and prevent airlines from raising fares.
“If our fuel price forecast is correct, I suspect it will also affect the economy,” United’s Kirby told Bloomberg. Even if the war ends soon and oil and jet fuel prices start to fall, that doesn’t necessarily mean fares will go down, Griff said.
Demand for travel could become even stronger, pushing up fares even higher. “That’s something people sometimes forget about fares,” he said. “Once they go up, they don’t come down at the same rate.”
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