FLYING GETTING MORE EXPENSIVE. Ticket Prices on the Rise
. The recent run-up in prices echoes the jump seen from 2009 to 2011..”By Todd Horwitz, Bubba Trading

 

Jet-fuel prices have surged more than 50% over the past year, pushing carriers to raise fares and Delta Air Lines Inc. to cut its profit expectations. Delta, the nation’s No. 2 carrier, said Wednesday it could take six to 12 months to recoup the extra fuel costs via pricier tickets.

Fuel is again the single-largest expense for most airlines, accounting for about a quarter of operating costs. The recent run-up in prices echoes the jump seen from 2009 to 2011, which first spawned stand-alone surcharges on many international flights.

“Consumers will pay more to travel because of higher fuel costs,” said Henry Harteveldt, a travel analyst and the founder of Atmosphere Research Group. “I think it will affect summer travel for people who have not already booked their flights.

“

Airlines have a few ways to build in higher fuel expenses, he explained. Some might raise base fares by up to $10, especially on long distance flights or business class seats. Others might add fuel surcharges or sell fewer seats at the cheapest prices. Earlier this week, the International Air Transport Association, a global industry group, cut its 2018 profit forecast by 12% from the start of the year, blaming rising fuel and labor costs.

Brent crude, the global oil benchmark, is up 12% this year to around $75 a barrel. Carriers are already telling Wall Street that fliers should prepare for higher prices. “If indeed this is where fuel prices are going to stay, I would expect you would see higher fares to consumers over time,” American Airlines CEO Doug Parker told analysts in April.

Keep those stops tight
Todd “Bubba” Horwitz

 

Todd’s Daily Video can be found here

IN ASSOCIATION WITH

Financial Markets & Political Commentary

 

Tags

, , , , ,

Related Posts

About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.