Fuel swings squeeze fares

Airlines around the world are raising fares, adding fees and cutting flights as jet-fuel prices swing sharply higher. (iata.org) The International Air Transport Association said the global average jet-fuel price rose 7.1% in the latest week to $209 a barrel. In the United States, CNBC reported jet fuel nearly doubled from $2.50 a gallon on February 27 to $4.88 on April 2. (iata.org) (cnbc.com) The price shock followed the war involving Iran and repeated disruption around the Strait of Hormuz, a key route for oil and refined fuels. Associated Press, published by U.S. News on April 9, said crude briefly topped $119 a barrel, then fell below $95 on ceasefire news before climbing back toward $100. (usnews.com) Airlines are reacting route by route because fuel is one of their biggest costs after labor. CNBC said Lufthansa is drawing up contingency plans that could include grounding aircraft, and United said it may cut more Asia flying if fuel stays high. (cnbc.com) The fare increases are already specific. Reuters reported Air France-KLM plans to raise long-haul cabin fares by 50 euros per round trip, while Air New Zealand said on April 7 it would cut flights in May and June and raise fares. (finance.yahoo.com) (money.usnews.com) In the United States, carriers are also pushing up ancillary charges. Reuters reported on April 7 that Delta raised checked-bag fees on domestic and some short-haul international routes, following similar moves by United and JetBlue. (money.usnews.com) Executives say the math is getting hard to absorb. Delta Chief Executive Ed Bastian said higher fuel prices would add $2 billion in second-quarter operating expense, and United Chief Executive Scott Kirby said sustained high fuel could add $11 billion a year. (usnews.com) (cnbc.com) Not every airline is exposed in the same way. Reuters reported IAG, the parent of British Airways, said on March 10 that it did not plan an immediate ticket-price increase because it had hedged much of its fuel for the short to medium term. (finance.yahoo.com) Passengers are seeing the result in fewer choices as well as higher prices. The Associated Press said budget airlines are likely to feel the pressure first, while full-service carriers are pruning schedules unevenly across markets rather than making one systemwide cut. (usnews.com) For now, the industry is pricing tickets against a fuel market that can jump or drop within days. That leaves airlines selling seats more cautiously and travelers booking into a market with higher fares, extra fees and thinner schedules. (usnews.com)