Major airline carriers and their passengers alike have endured quite a rough patch of turbulence lately—and we're not just talking about bumpy flights. The pandemic created gaping staff shortages, which in turn led to massive flight delays and cancellations. And now, while COVID cases continue to recede around the country, another problem triggered in part by Russia's war on Ukraine is adding complexity for passengers getting ready to book upcoming travel. Read on to learn what's happening across the industry, and how it might affect your next trip.
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Major U.S. airlines predicted strong revenue but lower capacity in response to surging fuel prices.
iStockOn March 15, major airlines around the U.S. raised their revenue outlook for the quarter ending in March as plummeting COVID cases continue to spike travel demand. But they also said that higher fuel prices would lead to reduced passenger capacity on flights, according to Reuters.
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Demand for air travel is white hot as COVID recedes around the country.
ShutterstockDelta Air Lines said last week that it recorded the highest ticket sales in the company's history because the increase in demand for travel is currently "unparalleled"—even historic in its precedent. "We've not seen a stronger demand ... in my career," Delta CEO Ed Bastian noted, according to Reuters.
United, too, described leisure travel as robust, with business travel also bouncing back even more quickly than anticipated.
This is all good news for major U.S. airlines at a critical time: Fuel prices are soaring in response to the circumstances triggered by Russia's war on Ukraine, and fuel costs represent the airlines' second biggest operational expense (after labor costs).
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Expect surging fuel prices to lead to higher airplane ticket costs.
ShutterstockTypically, airlines offset fuel costs by raising the cost of tickets. And accordingly, travel experts have said that passengers might soon expect to see higher ticket prices springing from current conditions. The higher costs "will impact all airlines, at a time when they were starting to see demand return with reducing COVID case counts and fewer border restrictions," Umang Gupta, managing director at Alton Aviation Consultancy, told Newsweek.
"A 737 right now costs a little over $36,000 to fill up versus $24,000," Richard Manrgum, an aeronautics professor at Kent State University, further explained to NBC-affiliate WKYC in Cleveland, Ohio. "An even larger aircraft like a 747 going [from] New York to London burns about 21,000 pounds of fuel, which is about $116,000 of gas right now."
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Airlines are cutting their capacity estimates for the weeks ahead, which will further spike ticket prices for passengers.
iStockWhen passengers pick up the tab for fuel in this manner, airlines expect the added revenue to more than offset their additional costs. However, passengers might also expect to find fewer seats available to where they want to go as these various market conditions converge.
American Airlines cut its capacity for the current quarter, according to Reuters. It's now estimating capacity to be down 10 to 12 percent compared with the same period in 2019, prior to the pandemic. Similarly, Delta, United, Southwest, and JetBlue have also said they expect to see lower capacity.
For passengers, this additional factor likely means even higher ticket costs: Higher prices due to surging fuel costs, plus lower supply compared to demand, equals big-time fare hikes. So if you're planning upcoming travel by air, be prepared to loosen up those purse strings to score a seat.
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