Why Air Travel Costs Will Continue to Rise

“Since the conflict began, the price of jet fuel has more than doubled to a record high of over $200 a barrel. That's a huge issue for airline companies because jet fuel makes up about 25% of their expenses.”

“they feel really optimistic, actually, that they can manage these high fuel prices by charging higher ticket prices and that there's so much demand for air travel that in the last couple of weeks that airlines have have put through, and and they say that they're holding.”

“Since the Strait Of Hormuz has been closed due to the conflict, about 20% of the world's jet fuel has not been able to get to global markets and pass through the Strait Of Hormuz. And that, has been a big problem for the jet fuel supply for airlines.”

“China is a big, importer of crude oil, but they are a huge refiner. So they do actually end up exporting a lot of their jet fuel. But since the crisis has started, they've been, stopping exports and keeping production at home for their domestic airlines.”

“A few weeks ago, Europe's airport industry body warned that if the Strait Of Hormuz did not open, you know, within the next three weeks, that shortages were a possibility in Europe. The authorities have been doing things to monitor, like, the flow of jet fuel around the continent, and refiners have, you know, switched their dials to max jet fuel production mode.”

“Ticket prices are already up, like 20% right now, and they seem pretty confident that by the end of the year, they'll be covering, you know, almost the whole run up in fuel prices, if if not all of it, through higher fares.”

“The first real domino to fall is Spirit, which was in bankruptcy for the second time in less than a year, like a really vulnerable airline to start with. It had an agreement with its creditors to come out of bankruptcy, and that agreement has just been sort of totally upended by fuel prices.”

“Beyond making flights more expensive, airlines are also starting to offer fewer flights. There also there might be fewer flight options. We're starting to see airlines cut back capacity because they're just no longer gonna fly unprofitable routes.”

“The airline executives who've been asked about this over the last week are actually kind of hopeful that that it won't happen. You know, they think airfare has been, like, an incredible deal over the last couple of years. It just hasn't gone up as quickly as inflation, and, you know, they think prices deserve to be higher, basically, and would like them to be higher.”