A major airline has warned passengers there could be a 20% price hike for tickets, as it has also confirmed the company is reducing its capacity by 5%. United Airlines Holdings Inc CEO Scott Kirby confirmed the shocking increase if jet fuel prices remain as high as they are amid the conflict in the Middle East.
He told Bloomberg TV that the airline is expecting some pushback from consumers and a potential drop in passenger numbers as a result. However, he maintained that demand remains very strong at the moment after United Airlines already slashed its capacity by 5% on routes that are not profitable and don’t cover higher fuel costs.
Earlier this month, Mr Kirby warned that if the US-Israel war against Iran continues, « We’ll feel it in Q2 also ».
Since the conflict began at the end of February, the price of jet fuel has skyrocketed 58%. The United Airlines CEO said price increases to airfare will « probably start quick » and could add a staggering $11 billion in annual expenses.
Despite this, he said travel has remained resilient overall, with booked revenue up 20% from a year ago. Demand « has not taken even a tiny step back », he added.
This comes as jet fuel prices more than doubled in just weeks – from about $2.17 to $4.56 per gallon by March 20, according to the Argus US Jet Fuel Index.
Delta Air Lines CEO Ed Bastian added that the increase in the cost of jet fuel added as much as $400 million in costs in March alone. American Airlines also expects fuel to add roughly $400 million to its first-quarter expenses.
Source link
