(KTLA) – Your next sticker shock: airline fares.
The cost of jet fuel is up about 50% so far this year, and the war in Ukraine isn’t helping. Oil prices have increased 60% since January.
You don’t have to be a rocket scientist (or an aerospace engineer) to know that carriers will pass along their higher costs to passengers in the form of higher prices or, more likely, fuel surcharges.
Analysts are already bracing for higher fares taking a bite out of airline earnings.
“The higher fuel will more than wipe out better revenue near-term resulting in modest reductions to [quarterly] estimates,” MKM Partners airline analyst Conor Cunningham said in a note to clients.
Airlines have lost billions of dollars since the start of the pandemic and are counting on a resurgence in travel as the pandemic gradually eases. Carriers generate most of their earnings in the second and third quarters, which coincide with spring and summer vacations.
Analysts believe this is when higher fares will be introduced to offset soaring fuel costs.
“It is likely the next few months will be financially concerning, even though traffic is strong,” Cowen & Co. airline analyst Helane Becker told clients.
Fuel surcharges often come off as deceptive to consumers because they are tacked on to base fares, masking the added cost.