Higher fuel prices could spur airline fare increases
Airlines 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 that fuel and oil costs were up 8% to $ 2.9 billion.
United Airlines said Oct. 19 that fuel costs were up 18% to $ 5 billion. Airlines expect the trend to continue. Delta CEO Ed Bastian said that he expects to spend $ 400 million more on fuel in 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 in the final three months of the year vs. 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,” he said.
Airlines rode cheap fuel to recordshattering profits in recent years. They reported after- tax net income of $ 24.5 billion in 2015 and $ 13.5 billion last year, according to the Transportation Department.