$4.90 a gallon. That was the average U.S. price of jet fuel on Thursday, according to the tracking firm Argus: the highest single-day average it has ever recorded, and more than twice the price a year earlier. The bottom line for travelers is that holiday tickets are going to cost a lot more.
By the numbers
“Airfares right now are at what we see as a 10-year high because of the high cost of jet fuel,” said Hayley Berg, lead economist at the travel tech company Hopper. Airlines, she said, have to pass those prices on in higher fares. Thanksgiving tickets are up about 30 percent from last year, and Christmas tickets more than 20 percent.
Chris Sununu, head of the trade group Airlines for America, told CNBC that carriers are absorbing most of the cost. “And some of it unfortunately has to be passed on to the customer and so you see that 20 to 30 percent increase as we go into the holidays,” he said.
Travelers keep booking
The figure that matters to airlines is demand, and so far it is holding. “We’re at the time of year where travel is really sticky,” Berg told NPR, adding that people are unlikely to change their traditional holiday plans even at higher prices. Delta Air Lines CEO Ed Bastian said on an earnings call this month that consumers showed a “limited amount of resistance” and still saw airfare as “reasonably affordable.”
Shoppers are changing how they buy. Berg said they are comparing prices more and booking earlier. She usually urges holiday travelers in mid-October to book by month’s end because prices will not fall, but this year more customers had already booked in September.
Some are opting out. At the Baltimore airport, Rachel Stern of Frederick, Maryland, said she will drive to Chicago because tickets for her and her children were “just too much.” Mary Haller, of Bethany Beach, Delaware, is flying to Europe anyway. Economy fares had climbed “significantly” in two weeks, she said, and left her with “shell shock.”
Europe may fare worse
The U.S. has more oil-producing and refining capacity than Europe, so the picture may be slightly better here. Higher fuel costs are still hurting U.S. carriers. In Europe, Ryanair CEO Michael O’Leary said this week in Belgium that fares could rise 10, 15 or maybe 20 percent next year. “You’re going to see the biggest increase in airfares, I would say, in history in Europe in the next 12 months,” he said.
Sources
- Jet fuel
- Jet fuel prices hit a record and holiday airfares soar higher
- Jet fuel prices hit a record and holiday airfares soar higher
Photo: SuperJet International (CC BY-SA 2.0)
