Higher fuel prices could spur air­line fare hikes

The Commercial Appeal - - Front Page -


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.

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