Air Travel Is About to Become More Expensive, Airline CEOs Say

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Planning on doing some summer or holiday traveling? Buy your tickets now.

CEOs at several major airlines say they expect prices to increase, due in part to escalating fuel prices. Just as bad? You may have more trouble finding a seat on the flight you want.

American Airlines CEO Doug Parker, speaking at the International Air Transport Association (IATA) Annual General Meeting, said fares will increase and capacity will decrease as carriers look to save on fuel costs. CEOs of Air New Zealand and Virgin Australia backed up that thinking.

Oil prices are at their highest levels since 2014, with Brent crude up nearly 50% in the past year. That’s a faster climb than ticket prices and could impact airlines’ long string of profitability. The IATA expects overall industry profits to be 12% lower than it originally predicted in December.

That means higher ticket prices, but airlines also plan to adjust capacity on planes for better fuel efficiency, which could make it harder to find a seat.

The spike in fuel prices could be good for Boeing and Airbus, though, as carriers speed up plans to replace older jets with newer models that can fly farther on less gas.

Randy Tinseth, Boeing’s vice president of marketing, says aircraft replacement makes sense for airlines when oil reaches $65 a barrel. As of Tuesday morning, the price per barrel of Brent Crude was more than $74.

[“Source-fortune”]

Written by Loknath Das