As jet fuel prices continue to rise, U.S. airlines have curbed consumption and some are contemplating fare increases.
According to a report released Wednesday by the Bureau of Transportation Statistics, carriers used 1,434 billion gallons of fuel in April, a 2.1 percent drop from March, while costs per gallon rose 4.5 percent to $2.08. The last time fuel costs were that high was in May 2015, according to the bureau. The total amount airlines spent on fuel rose 2.5 percent to nearly $3 billion.
Oil prices are spiking globally, spurred in part by President Trump’s decision to withdraw the U.S. from the Iran nuclear accord, and airline executives previously warned that ticket prices might be increased as a result.
Earnings for the nine publicly traded U.S. airlines fell 24 percent in the first quarter of 2018 to $1.9 billion, according to the industry lobbying group Airlines for America. While revenue grew 7 percent in the period, expenses, including fuel costs, rose 9.9 percent, a spokesperson said.
Delta Air Lines said in a federal filing on Wednesday that it plans to determine its fall flight schedule in June, based on factors including the “volatile” fuel market. Jet fuel has climbed about 50 percent in the past year and 12 percent since the start of the spring quarter, the carrier said.
Despite the concerns, some carriers remain optimistic. United Airlines boosted the lower end of its full-year earning target by 8 percent to $7, while Allegiant Air said more efficient jets are helping it cope with higher fuel costs. Chief Executive Officer Maurice Gallagher told shareholders in a note that the carrier is getting 44 percent more flight capacity from each gallon of fuel.
“Given the benefit of better fuel metrics and operational reliability, we will be able (and have been so far) to increase our daily utilization, making our fleet more productive,” he wrote.
Southwest Airlines, which had expected a slowdown in ticket sales after a fatal accident earlier this year, said in a recent federal filing that revenue passenger miles, the industry’s gauge of demand, increased 4.2 percent in May to 11.7 billion. The company still expects its second-quarter operating revenue to drop roughly 3 percent in the wake of the mid-flight engine failure that shattered a cabin window, resulting in the death of a Wells Fargo executive.
