When jet fuel prices shot up this spring, airlines responded by raising their ticket prices and fees.Now fuel costs are coming back to earth.
But don't expect the airlines to give those price increases back right away."If people will pay it, why would you take it back?" said Michael Boyd, a longtime aviation industry consultant."I mean, if people are willing to pay an extra $5 to check a bag and there's no pushback, don't be silly."The price of jet fuel is down to its lowest level since the war in Iran began more than three months ago.
On Tuesday, the average price of a gallon was $2.80, according to the tracking firm Argus.That's down more than $2 per gallon from the peak in April, though still higher than before the war began.Travelers have shown they're willing to pay higher airfares, at least so far.
And aviation experts say airlines face rising costs across the board, not just for jet fuel."We have labor costs coming up.We have operational costs going up at airports," Boyd said in an interview.
"So in terms of looking forward to a future of bright low $59 fares, that was on another planet long, long ago."The high cost of fuel has already hurt airlines' bottom lines, according to Willie Walsh, the head of the International Air Transport Association, which represents airlines around the world."We expect average jet fuel prices to be 70% higher year on year.And that will add $100 billion to our collective fuel bill this year," Walsh said at the organization's summit meeting in Brazil earlier this month, resulting in "wafer-thin" profit margins for the global industry of just 2%.In the U.S.
alone, airlines lost a billion dollars in the first quarter of the year, according to the Department of Transportation. Even if the Strait of Hormuz reopens to shipping, airline executives say fuel prices won't return to normal overnight.That's particularly challenging for smaller carriers like JetBlue, which hasn't turned a profit since 2019."Even if the war were to end,...