The holiday travel season is one of the busiest times of the year for airlines, with most planes full of passengers, and air carriers seeing nice profits. Airlines are welcoming this approaching holiday travel season, too, especially as they work to emerge from the downturn in travel caused by continuing coronavirus issues. Typically, carriers also offer a variety of holiday fare deals, which is in keeping with the season. However, increasing jet fuel prices may put a damper on the holiday festivities for travelers.
Price Spikes Looming
According to reports, some airline CEOs are sounding the alarm about the upcoming holiday travel season. They’re warning that ticket prices are about to climb just as the season nears, and the reason for why they’re going to rise is simple: Jet fuel prices are surging.
What’s Happening
It seems that jet fuel prices are now increasing to levels that haven’t been seen since before the COVID-19 pandemic became a hazard nearly 2 years ago. Naturally enough, airlines absorbing such a hit to theirexpenses would have to pass those costs along to passengers. The reason for why simple, too: Higher jet fuel prices increase an airline’s operating costs, and such costs are normally passed along to passengers.
Greater Travel Demand
There’s also likely a pent-up travel demand for this upcoming holiday season, given that last season’s was greatly depressed due to lockdown and stay-at-home orders imposed by a variety of governments. As thelaw of supply and demand shows, increased demand for a good or service usually decreases the supply of it (in this case, available airline seats) and in turn increases its value or the price that’s charged for it. Travel in 2021 is verifiably up from 2020, too, with the US Transportation Security Agency reporting larger passenger security screening numbers on most days as well.
Jet Fuel Prices
Though analysts’ predictions vary as to how high they’ll ultimately climb, there’s no doubt jet fuel prices have indeed increased sharply since last year. Currently, a gallon of jet fuel is priced at anywhere from $2.32 to $2.35 per gallon, up more than 115 percent from a year ago. One major US airline believes jet fuel will rise to almost $2.40 per gallon or more as the holiday travel season kicks into high gear.
Airline Price Increases
Airlines don’t typically like to speak publicly about anticipated price increases or decreases, preferring to keep such matters private. Passengers are sometimes acutely sensitive to fare prices and have been for many years now, and airlines fear that business could be driven away if they focus too publicly on their ticket pricing strategies. Passengers are also able to shop online for the best prices at any given time and may change flight plans to another airline offering even a slightly lower fare for travel to their desired destination.
New Realities
This year, as the world continues to deal with the likely permanent presence of the new COVID-19 coronavirus in peoples’ lives, it’s also forced to deal with new realities brought on by the virus’s aftereffects. These include disruptions in the supply chain for all sorts of goods and materials.
For airlines, the impact of COVID-19 on their bottom line is undeniable, and it’s evidenced by increases in the price for something they absolutely can’t fly without: Jet fuel.
Kelly Hoggan, Founder and CEO of H4 Solutions, previously served as assistant administrator for operations at the Transportation Security Administration. In that role, he was responsible for aircraft and checkpoint security operations at the nation's 450-plus commercial airports.