WAR SENDS AIRFARES SOARING
Airlines are preparing for long haul by adding fuel surcharges, fees
Above: Travelers well up March 12 at the self check-in kiosks for United Airlines in the main terminal of Denver International Airport in Denver.
Left: An airplane is refueled Nov. 23 at Seattle-Tacoma International Airport in SeaTac, Wash.
AIR TRAVEL| Q&A
Jet fuel prices are rising as the war in the Middle East disrupts global oil supplies, putting cost pressure on airlines as the busy summer travel season approaches.
Experts say it's not a question of if airfares will go up, but when, for how long and by how much. The effects may be felt most on longhaul international routes, which burn significantly more fuel than shorter flights.
Some airlines outside of the U.S. announced fare increases or fuel surcharges in an effort to offset the growing expense. In the U.S., United Airlines CEO Scott Kirby recently warned airfare increases will "probably start quick" as increasing fuel costs work their way through the industry.
What's causing this?
The war is constraining oil exports and prompting major producers like Kuwait, Saudi Arabia and Iraq to scale back output as shipments face growing obstacles.
Iran attacked commercial ships across the Persian Gulf and targeted oil infrastructure in Gulf Arab nations following U.S. and Israeli strikes. The attacks effectively halted traffic through the Strait of Hormuz, which carries about one-fifth of the world's oil supply.
The volatile crude oil prices causing retail gasoline prices to swing up sharply had the same effect on the price of jet fuel.
It's difficult to predict exactly how much ticket prices could increase as a result of costlier oil and fuel. Industry analysts say the effects of higher jet fuel costs can vary based on the route, airline and travel demand.
Fuel typically accounts for 20% to 25% of an airline's operating costs, making it the second-largest expense after labor, according to Rob Britton, an adjunct marketing professor at Georgetown University and retired American Airlines executive.
What does it mean?
Some airlines are partially protected from sudden price spikes through fuel hedging, a strategy that allows them to lock in fuel prices months or even years in advance. But not all airlines hedge, and those that do are usually only protected for a portion of their fuel needs, meaning prolonged price surges may cause more carriers to raise fares.
Another factor: Air space closures required rerouting flights around parts of the Middle East, which can mean longer routes, additional fuel burn and higher operating costs.
Airlines can add or increase fuel surcharges for travelers, an extra fee common among carriers outside of the U.S. that's added on top of the base ticket price.
Major U.S. carriers instead build fuel costs into the overall ticket price, meaning an increase is more likely to show up as a higher base fare for travelers, according to Tyler Hosford, security director at global risk management firm International SOS.
Airlines also may adjust what they charge for premium addons — such as seat upgrades, extra legroom seats, checked bags or priority boarding — to offset higher operating costs. So, even if the base fare doesn't rise immediately, the total cost of a trip still could increase once additional fees and upgrades are factored in.
Airlines may also adjust schedules or reduce certain routes, said Christopher Anderson, a professor at Cornell University's business school whose research includes operations and information management in the hospitality and airline industries.
Who announced hikes?
So far, most fare increases and fuel surcharges are coming from airlines based in the Asia-Pacific region, but experts expect more airlines to follow if high jet fuel prices persist.
Hong Kong's flag carrier, Cathay Pacific, said it would increase its fuel surcharge. "The price of jet fuel has approximately doubled since March amid the latest developments in the Middle East," the airline said.
Other airlines with price increases or new surcharges include:
â– Air France-KLM said roundtrip economy fares on long-haul flights could rise by about $57.
â– Air India said after March 18, the fuel surcharge would increase by up to $50 for all tickets to Europe, North America and Australia.
â– Hong Kong Airlines increased fuel surcharges across several routes.
â– FlySafair in South Africa announced a temporary fuel surcharge.
What can I do?
Experts say travelers planning summer trips may be able to limit the effects of rising airfares by booking earlier rather than waiting for last-minute deals.
Locking in ticket prices sooner — especially with flexible booking options that allow changes — can help secure lower prices before airlines adjust rates further.
Hosford, the security director at International SOS, suggests travelers stay flexible with travel dates, check fares at nearby airports and set alerts for price drops. He also recommends using frequent flyer miles or credit card points to book flights instead of holding out for a "perfect deal."
