Higher fuel prices could spur airline fare hikes
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 compared with last year.
For example, American Airlines said Thursday that aircraft fuel and related taxes were up nearly 20 percent to nearly $4.5 billion. On Oct. 19, United Airlines said its fuel cost was up 18 percent to $5 billion. Other major airlines have reported similar increases, and the trend is likely 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 percent increase 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 higher fares could follow.
Airlines rode cheap fuel to record-shattering profits in recent years.