Airfares to take off?

Airline passengers hate higher airfares, but investors like them, especially when a key cost like fuel is rising.

American Airlines CEO Doug Parker and Delta’s Ed Bastian have said fares must rise to cover the run-up in fuel prices.

Jet fuel accounts for nearly one-fourth of all expenses at the biggest U.S. airlines, and the price of fuel has soared more than 50 percent in the past year, according to government figures.

That’s cutting into profits. Last week Delta Air Lines lowered its forecast of full-year earnings by about 10 percent.

Cheaper fuel contributed to lower average fares in recent years. American, Delta and United are now seeing increases in a revenue per mile figure that roughly tracks fares. Still, it hasn’t been enough to cover the extra fuel cost, and airline stocks have slumped this year. (United is bucking the trend.) When fuel was cheaper, airlines added marginally profitable flights. That too could be changing with the higher prices at the airport pump.

Last week Southwest trimmed its expansion plans for the rest of the year, and analysts expect others will follow.