- Airlines’ costs are rising along with a rebound in travel demand.
- Fuel prices and labor costs, airlines’ two biggest expenses, have increased sharply.
- Frontier’s CEO Barry Biffle says the discount carrier should be profitable this summer.
Travelers can expect higher airfares this spring and summer, even on discount airlines.
Frontier Airlines CEO Barry Biffle told CNBC’s “Closing Bell” Friday that bookings and what travelers are paying for tickets as well as add-ons like baggage fees are the highest in the pandemic.
“Even with the high fuel prices we believe we can be profitable this summer,” Biffle said.
Jet fuel, generally airlines’ biggest expense after labor costs, has jumped 80% so far this year in the U.S. to the highest levels since 2008 in March as Western nations imposed sanctions on Russia in protests of its attack on Ukraine.
“We’ll have to gently raise our fares,” Biffle said.
Denver-based Frontier Airlines doesn’t hedge fuel by locking in prices using futures contracts. Some big U.S. carriers like American Airlines abandoned fuel-hedging programs after oil prices cratered in 2014. Southwest Airlines and Alaska Airlines continue to hedge, however.
Airlines are also struggling to ramp up staffing in a tight labor market. During the pandemic, a $54 billion federal aid package prohibited U.S. carriers from laying off staff, but carriers urged thousands of employees to take early retirement or other optional packages.
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