WASHINGTON (TNND) — Holiday travelers could face higher airfare later this year as major airlines signal they may cut some of their cheaper flights amid rising fuel costs tied to turmoil in global oil markets.
Airline executives from United, American and Southwest say they expect to reduce some less profitable, lower-priced flights in the final months of the year. The concern centers on fuel prices as the Iran war, along with recent Houthi attacks on oil infrastructure, has rattled oil markets. When oil prices rise, the cost of gas, diesel and jet fuel also increases.
Experts say uncertainty is driving much of the market anxiety.
“They’ve gone after U.S. bases. They’ve shown that they can sow chaos, and I think that’s what the market is very worried about now, especially as all of these things dovetail together,” said Patrick De Haan of GasBuddy.
Rising fuel prices are already squeezing other industries, including trucking. Truck driver Jerry Skimpy Seaman said higher fuel costs have forced him to change how he operates.
“You have to manage your money if you’re going to be in trucking, and I mean really manage it. And you have to be careful what you do and understand where your expenses are. Since fuel has gone higher I’ve had to slow down, so my top speed now has been 65 instead of where it was 68 to 70 before,” he said.
Shelly Koch, president of KJ Trucking, said fuel spikes can quickly drain a company’s finances and affect which jobs it can take.
“The biggest hardship that we deal with is it hurts your cash flow, right? It takes cash out of your business kind of immediately like California today, fuel is $8 a gallon. So if we’re not getting paid appropriately to go there and to get that fuel cost offset, we just won’t take that,” Koch said.
Farmers are also feeling the impact of higher diesel prices. Laura Collins, co-owner of Willow and Co., said, almost everything at her farm uses diesel including her combines and tractors.
“It’s a massive cost on us. Of course, after the last two seasons, we were barely keeping our head above water and then you tack all this extra weight onto our shoulders and we’re just sinking,” Collins said.
For airlines, higher jet fuel prices could mean fewer opportunities to offer cheaper flights. Southwest CFO Tom Doxey said if fuel is “higher for longer,” the company’s natural response would be to trim capacity, including cutting back on cheaper, less profitable flights.
Etihad Airways CEO Antonoaldo Neves also pointed to fuel as a key concern even as bookings remain strong.
“If you ask me if I have any concern, it’s jet fuel,” Neves said.
If fuel costs remain elevated, he said, fares could rise further.
“At this jet fuel level that we have today, if that takes too long, we may see prices going up, and that may impact customers’ willingness to fly,” he said.
Airfares were already roughly 25% higher this summer than they were a year ago.
With major holidays such as Thanksgiving, Hanukkah and Christmas still months away, travel experts recommend booking flights now as the war with Iran continues to disrupt oil markets.