Expect plane tickets to get spendier as war in the Middle East pushes up jet fuel costs
Published in Business News
Airfare prices are likely increasing, and soon, as the cost of jet fuel has risen dramatically since the start of the war in Iran on Feb. 28.
Travelers may see fuel prices impacting airfares “quickly,” United Airlines CEO Scott Kirby said at an event in Boston last week, according to CNBC.
Airlines “will adjust their future ticket prices as soon as possible to reflect updated fuel price expectations, potentially keeping them higher for a while,” wrote Morningstar aerospace analyst Nicolas Owens.
Kyle Potter of Minnesota-based Thrifty Traveler said the situation could get “ugly” if it drags on much longer. Supply and demand, rather than fuel costs, is what really moves the needle when it comes to airfare, he said. But there’s no question that airlines will try to pass as much of the spike in fuel prices onto consumers as they can.
His advice? If travelers can stomach the price, book domestic trips now.
“I can’t say whether someone’s flight to Cancún next month or Phoenix next year will go up. But the odds of fares rising — maybe even by a lot — are definitely higher than they’ve been in a while,” Potter said in an email.
As long as travelers don’t book the cheapest basic economy fare, they can rebook if price eventually drop and keep the difference as a flight voucher or credit, Potter said.
The price of jet fuel has skyrocketed since the U.S. and Israel began bombing Iran, and it is up by more than 50%. As of Friday, fuel is going for $3.88 a gallon, according to the Argus U.S. Jet Fuel Index.
Fuel accounts for 20% to 25% of airlines’ costs, Owens writes. He expects demand for “price-sensitive leisure travel” — which includes the many low-cost flights operated by Minneapolis-based Sun Country Airlines — could “shrink” as travelers rethink plans.
Kirby’s comments appeared to be the first public warning from a major airline executive that domestic travelers will feel the impact of the conflict in the Middle East.
“Kirby might have been the first to say that out loud, but he won’t be the last,” Potter said.
International travel has been upended as thousands of flights, including many at the world’s largest airport in Dubai, have been canceled over the past week.
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