With summer airfares already climbing fast, airline executives have not been shy in telling travelers that prices are only going to get steeper as we head into spring and summer.
Last week, Delta CEO Ed Bastian told the Financial Times that higher fuel costs would “no question” lead to fare hikes, and that the airline would add a fuel surcharge to international flights as “market conditions permit.” Meanwhile, at a JPMorgan investor conference, Delta president Glen Hauenstein said passing on higher fuel costs “is something that we can easily achieve and that we will achieve in the second quarter. As fuel prices fluctuate rapidly here, we need to recapture somewhere between $15 and $20 each way on a ticket.” Translation: Expect a $30-$40 hike on a roundtrip ticket this summer.
But don’t buy the line that higher airfares are entirely due to jet fuel prices, say airfare experts.
While jet fuel prices, high demand and the pilot shortage are all conspiring to drive airfares up this summer, there are also factors that could mitigate that trend.
In the past week, jet fuel prices have dropped more than 6% worldwide and nearly 7% in North America, according to data from the International Air Transport Association (IATA), the trade association representing some 290 airlines around the world. If that trend continues, airfares should come down, according to economic theory. “There is a little bit of lag, usually, between those fuel price and oil price adjustments and when it appears in airfare,” says Damodaran. “It makes sense that if fuel prices keep coming down, that that should result in lower airfares.”
Read the full story on Forbes: forbes.com/sites/suzannerowankelleher/2022/03/20/airfares-soaring-good-deal/?sh=208bbc01b191
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