Those Higher Airfares May Stick Even if Fuel Prices Drop
Photo Credit: A fuel truck drives by Delta Air Lines aircraft on the tarmac at Los Angeles International Airport. Adobe Stock / Thomas
Skift Take
Airlines are betting that they can hold onto their pricing power even as the price of fuel decreases due to strong demand and fewer competitors in the industry.
If the latest deal between the U.S. and Iran holds, fuel prices may finally head lower and stay down. But don’t expect airfares to follow.
Airfares are up an average of 20% since the start of the war, and airline executives are expecting that those increases will be more sticky this time around. And that means higher profit margins.
“Fuel recapture is going to be important,” said Delta Air Lines CEO Ed Bastian during a call with analysts in April. “No matter what we do, and the degree in which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.”
Bastian added that he anticipated fuel prices will still be higher this year compared to last year even if they settle down. As of Monday, the average price of jet fuel has trended down to $2.79 a gallon, according to data from Argus Media published by Airli
