Airlines cope with higher fuel prices
and that could mean higher fares
irlines are bracing for escalating fuel costs this year — and that could lead to higher fares.
Fuel, which is often an airline's largest expense after salaries, cost more at the five largest airlines compared with last year. During the first nine months of the year:
• American Airlines said Thursday that aircraft fuel and related taxes were up nearly 20% to nearly $4.5 billion.
• Delta Air Lines said Oct. 11 that aircraft fuel and related taxes were up 9% to $4.2 billion.
• JetBlue Airways said Tuesday that fuel and related taxes were up 27% to $994 million.
• Southwest Airlines said Thursday fuel and oil costs were up 8% to $2.9 billion.
• United Airlines said Oct. 19 that fuel cost was up 18% to $5 billion.
Airlines expect the trend to continue. Delta CEO Ed Bastian expects to spend $400 million more on fuel during the second half of the year than the carrier projected just three months ago.
Derek Kerr, American’s chief financial officer, projected a 16% hike in consolidated fuel prices during the final three months of the year, compared with last year.
If higher prices remain stubborn, rather than a short-term spike, American CEO Doug Parker warned Thursday that fares could follow.
“Fuel spikes could have an impact,” Parker said. “But if it's just increases, given where we are, I think what you see is fares rise to levels to offset much of the fuel price increase.”