As oil prices rise, airfares are surging and some airlines might not survive

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Summer travel will be more expensive and some airlines could go out of business as the war in Iran continues to drive oil prices up.Airlines across the world have been grappling with higher jet fuel prices since the U.S.

and Israel began bombing Iran late last month.Customers are already facing higher fares.United Airlines Chief Executive Scott Kirby said this week that his company could face an $11-billion loss if oil prices remain at their current levels.

Meanwhile, United’s airfare could increase by 20%, he said.With thin profit margins and oil prices hovering around $100 per barrel, airlines have no choice but to pass the increased costs onto consumers.

Business With the war in Iran restricting the oil market and sending prices up, U.S.customers will likely have to shell out more for airfare soon.Some airlines might not survive the hit.

Kirby compared the situation to the pandemic in 2020, when a global shutdown squashed demand and travel.“If these other guys make the same mistakes they made six years ago, and if the forecast about $175 per barrel is right, you’ll see airlines not survive,” he said Tuesday.Budget airlines are at higher risk because they have razor-thin margins and rely on high customer volume, said Alan Fyall, an associate dean of the University of Central Florida Rosen College of Hospitality Management.Spirit, the low-cost carrier that filed for its second bankruptcy last year, cut several routes earlier this month.

“They’re less resilient to these types of challenges,” Fyall said.Business Spirit Airlines, after filing for bankruptcy twice in the last year, is pulling flight services from 12 cities across the country, including four in California.The impact will vary by airline, he added.

Many airlines hedge their fuel to negotiate a fixed price, and stock up on fuel while it’s less expensive.United Chief Commercial Officer Andrew Noce...