Jet fuel prices are also rising War In the Middle East, it is disrupting global oil supplies, putting cost pressure on airlines as the busy summer travel season approaches.
Experts say it’s not a question of if Airline ticket prices will riseBut when, for how long and to what extent. The impact may be most felt on long-haul international flights, which consume much more fuel than short-haul flights.
Some airlines outside the United States have announced price increases or imposed fuel surcharges in an attempt to offset increased expenses. In the United States, Scott Kirby, CEO of United Airlines, recently warned that increases in airfare prices “will likely begin quickly.” Increased fuel costs They work their way through the industry.
The war is restricting oil exports and pushing major producers such as Kuwait, Saudi Arabia and Iraq to reduce production as shipments face increasing obstacles.
Iran has attacked commercial ships across the Persian Gulf and targeted oil infrastructure in Gulf Arab states following US and Israeli strikes. The attacks effectively stopped traffic across the road Strait of HormuzIt is a narrow corridor that carries about a fifth of the world’s oil supplies.
the Volatile crude oil prices Causing retail gasoline prices to rise sharply had the same effect on jet fuel prices. The average price in the United States reached $3.99 a gallon on Friday, up from $2.50 the day before the war began two weeks ago, according to the Argus U.S. Jet Fuel Index. The index tracks the average price airlines pay for jet fuel across major U.S. airports.
Figures from the U.S. Department of Transportation’s Bureau of Transportation Statistics show U.S. airlines paid about $2.36 per gallon of fuel in January, the most recent data available.
Some airlines are partially protected from price spikes by fuel hedging, a strategy that allows them to lock in fuel prices months or even years in advance. But not all airlines have hedging, and those that do typically only hedge a portion of their fuel needs, meaning that prolonged high prices could lead to more carriers raising prices.
“Nobody hedges anymore, and even if you do, hedging crack spread is very difficult,” Kirby said at an event at Harvard University last week. The crack spread is the difference between the price of crude oil and the price of products produced from it, such as gasoline.
Another factor for airlines: Airspace closure These flights required rerouting flights around parts of the Middle East, which could mean longer routes, additional fuel burn, and higher operating costs.
Travelers may feel the impact in several ways.
Airlines can add or increase fuel surcharges, which are common surcharges among carriers outside the United States that are added on top of the base ticket price.
However, major US airlines do not charge separate fuel surcharges. Instead, they add fuel costs to the overall ticket price, meaning any increase is likely to show up as a higher base price for travelers, according to Tyler Hosford, security director at global risk management firm International SOS.
Airlines may also adjust their fees Premium add-ons – Such as seat upgrades, seats with extra legroom, checked bags or priority boarding – as another way to offset higher operating costs. For consumers, this means that even if the base price doesn’t rise right away, the total cost of a trip can increase once surcharges and upgrades are taken into account.
If high fuel prices persist, airlines may also adjust schedules or reduce certain routes, said Christopher Anderson, a professor at Cornell University Business School, whose research includes operations and information management in the hospitality and airline sectors.
It is difficult to predict exactly how much ticket prices could rise as a result of the rising cost of oil and fuel. Industry analysts say the impact of rising jet fuel costs could vary based on route, airline and travel demand.
Fuel typically accounts for 20% to 25% of an airline’s operating costs, making it the second-largest cost after labor, according to Rob Britton, an associate professor of marketing at Georgetown University and a retired US Airways executive. Therefore, a sharp rise in fuel prices could have a significant impact on airline budgets.
So far, most price increases and fuel surcharges have come from airlines based in the Asia-Pacific region, but experts expect more airlines – especially those without fuel hedging – to follow suit if high jet fuel prices persist.
Hong Kong’s national carrier, Cathay Pacific, said it would increase fuel surcharges starting Wednesday.
“The price of jet fuel has nearly doubled since March amid the latest developments in the Middle East,” the airline said in a statement on Thursday.
Other airlines with fare increases or new surcharges include:
– Air France-KLM said round-trip economy fares on long-haul flights could rise by about 50 euros (about $57).
– Air India introduced fuel surcharge on Thursday on certain routes. After March 18, the carrier says surcharges will rise by up to $50 for all tickets to Europe, North America and Australia.
– Hong Kong Airlines has increased fuel surcharges across several routes from Thursday.
– FlySafair in South Africa has announced a temporary fuel surcharge
Travelers planning summer trips may be able to limit the impact of rising airfares by booking early instead of waiting for last-minute deals, experts say.
Locking in ticket prices sooner — especially with flexible booking options that allow for changes — can help secure lower prices before airlines adjust prices further.
Hosford, security director at International SOS, suggests travelers be flexible with travel dates, check prices at nearby airports, and set alerts for price drops. He also recommends using frequent flyer miles or credit card points to book flights instead of waiting for a “perfect deal.”
“If you were going to spend money on the trip but don’t now, this is a good refund deal,” he said.