Flyers are paying more, but airlines aren’t seeing much of the upside. US airfares climbed 23.4% in August from a year earlier, helping carriers forecast double-digit third-quarter revenue growth. However, much of that boost is being swallowed by jet fuel costs that have hit multi-year highs during the Iran war and led Wall Street to cut profit estimates across the sector.
- Hopper pegs Thanksgiving round-trip fares at $402, up 31% from last year, while Christmas flights are 23% pricier at $452.
- Delta's share of the Big Four's pre-tax profit has climbed to 51% from 42% over two years, while American's slid from 15% to an estimated negative 5%
Fuel burn: More capacity cuts could be coming if fuel stays expensive. Raymond James analyst Savanthi Syth expects airlines to trim flights if jet fuel holds near $4 to $4.50 a gallon, which could support fares. Delta Air Lines reports Friday, putting the industry’s response to higher costs in focus. As Qantas CEO Vanessa Hudson put it, “You can’t run the business on the hope that the Strait of Hormuz is going to open at a certain time.”
