Airline Companies Around the World Hike Prices in Response to Iran War
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The article discusses Operation epic Fury, the sustained strikes by the United States and Israel against Iran, and how the conflict is spilling over into travel and energy markets.It notes that tensions around the Strait of hormuz are driving up energy prices and,in turn,US airfares,with a CBS News report citing Deutsche Bank findings of a 15% to 124% rise for travelers who book late. Even discount carriers like Spirit Airlines are seeing higher fares (around $193 in late March versus $86 previously). average transcontinental flight costs have risen by more than 100%.
Airlines are responding in various ways to higher jet fuel costs, with some considering grounding flights. Qantas and Scandinavian airlines have added fuel surcharges, and Qantas indicated fare increases due to rising fuel prices, noting these will vary by route. United Airlines CEO Scott Kirby warned that jet fuel costs would have a meaningful impact on the company’s quarterly results, and he suggested the effect could accelerate if prices remain high.While some carriers hedge fuel costs, United does not, which could lead to quicker ticket-price rises.
Meanwhile, aviation disruptions in the Middle East have led to extensive flight cancellations-more than 46,000 between February 28 and March 11, according to Cirium data reported by NPR. Dubai International and airports in Doha and Abu Dhabi have canceled flights as the region experiences ongoing turmoil.
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Operation Epic Fury, the series of strikes against Iran being carried out by the United States and Israel, has been unfolding in the Middle East for more than two weeks.
But Americans on the other side of the planet are feeling the effects.
As energy prices rise amid Iran’s halting of traffic through the Strait of Hormuz, the average cost of airfare in the U.S. is also increasing, per a report from CBS News.
The outlet noted that Deutsche Bank found a 15 percent to 124 percent increase for average domestic airfares among consumers who book flights later this month.
Even at the discount carrier Spirit Airlines, travelers looking for a ticket in late March can expect to pay $193, a rapid increase from $86.
Meanwhile, the average cost of transcontinental flights rose more than 100 percent.
There are some airlines around the world that have started considering the possibility of grounding flights in response to rising jet fuel prices — which make some trips no longer worthwhile financially for carriers.
Qantas, which is based in Australia, and Scandinavian Airlines both added fuel surcharges to their tickets.
Qantas said in a statement to CBS News that they are “increasing fares this week in response to rising costs, including the significant increases in jet fuel prices.”
“These increases will vary from route to route,” the company added.
United Airlines CEO Scott Kirby said on March 5 that the cost of jet fuel would have a “meaningful” impact on the company’s financial reports this quarter, CNBC reported.
“If it continues we’ll feel it in Q2 also,” Kirby said.
Some airlines hedge jet fuel — locking in certain price points with futures contracts.
But United Airlines does not, meaning that the impact of fuel prices on ticket costs would “start quick,” he correctly predicted.
“No one hedges anymore and even if you do, hedging the crack spread is really hard to do,” Kirby said, referring to the price difference between crude oil and products such as gasoline.
In the war-torn Middle East, there have meanwhile been more than 46,000 flight cancellations between Feb. 28 and March 11, according to data from aviation analytics firm Cirium reported by NPR.
Dubai International, which is the busiest airport in the world for international travel, as well as airports in Doha and Abu Dhabi, have been forced to cancel flights.
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