Airlines cutting flights, prices rising

Airlines are starting summer with the worst mix for travelers: fewer flights on the board and higher charges on the checkout screen, after jet fuel prices in the United States nearly doubled from $2.50 a gallon on February 27 to $4.88 on April 2. (cnbc.com) The trigger is not one airline mistake or one bad holiday weekend. Fighting tied to Iran and repeated disruption near the Strait of Hormuz, the narrow shipping lane that moves a huge share of the world’s oil, pushed oil from roughly $85 to $90 a barrel up to about $150 to $200 in recent weeks. (whtc.com) Airlines can survive a busy weekend with high fuel, but they struggle with whiplash. The Associated Press quoted Georgetown University lecturer Shye Gilad saying volatility is the real problem, because carriers have to set prices and schedules weeks or months before they know where fuel will land. (nbcconnecticut.com) That is why the cuts are showing up first in the least forgiving parts of the map. United Airlines chief executive Scott Kirby said the carrier expects to pull back service to Asia, where long flights burn more fuel and local supply can get tight even if the United States refines plenty overall. (cnbc.com) Other airlines are making the same math visible in different ways. AirAsia X said it cut 10% of flights and added about a 20% fuel surcharge, while Air New Zealand said on April 7 that it would slash flights through May and June and raise fares. (whtc.com) In the United States, the first sign for many travelers is not the base fare but the bag fee. Reuters reported that Alaska raised its first checked bag fee by $5, American raised the first and second checked bag by $10 each, and Delta also raised checked baggage fees this week. (whtc.com) The reason airlines cut flights instead of simply charging more is that some tickets will not absorb the extra cost. Raymond James analyst Savanthi Syth told CNBC that fuel around $4 to $4.50 a gallon is above what carriers can reliably win back through fare hikes, so the next lever is shrinking capacity. (finance.yahoo.com) That shrinking is already visible in the data. A UBS report cited by CNBC showed planned second-quarter domestic seat growth for United States airlines slipping to 2.1% from 2.3%, while overall capacity growth fell to 1.1% from 2.4% in the week ended March 20. (finance.yahoo.com) For travelers, the practical hit is not just a pricier ticket. When airlines trim schedules, the nonstop you wanted is more likely to disappear, and the backup flight that used to save a missed connection may no longer exist. (nbcconnecticut.com) The frustrating part is that relief, even if oil drops tomorrow, may arrive late. The Associated Press reported that airlines can take months, and sometimes up to a year, to fully reset fares and fees after fuel markets calm down. (nbcconnecticut.com)