Airlines raise prices and do not plan to lower them even with cheaper fuel

While aviation fuel prices are soaring due to the war with Iran, major air carriers are openly stating that they do not plan to lower fares, even if fuel costs later fall. United Airlines CEO Scott Kirby emphasized that the increase in ticket prices is a result of both extremely strong demand for air travel and sharply increased fuel prices – and passengers continue to book in record volumes despite more expensive flights.

"Strategy to maintain high prices"

According to "CNN", airlines are preparing to make the current price increase a permanent element of their model. During a conversation with investors on the quarterly results of "United Airlines" on April 22, Kirby explained that in the first quarter, the company increased ticket prices a total of five times. He added that even if oil prices return to pre-conflict levels, the carrier could retain about 20 percent of the price increases already made – and for a longer period of expensive fuel, this share could increase to 80 percent.

"The longer consumers pay these prices and airlines get used to such a level of revenue, the more likely it is to remain permanent," Kirby said. In other words, the industry is using the fuel crisis not only to offset current costs, but also to move the base price level upwards.

"Passengers pay significantly more"

Currently, passengers pay an average of about 20 percent more for every kilometer flown compared to last year. Since the beginning of the conflict, aviation fuel prices have almost doubled and, according to "Argus Media", have reached approximately $4.8-4.9 per gallon, compared to about $2.50 at the end of February. The increase is even steeper than that of gasoline and diesel, which makes the impact on airlines particularly strong.

In response to this, in addition to increasing ticket prices, major carriers such as "Alaska Airlines", "American Airlines", "Delta", "JetBlue", "Southwest Airlines" and "United Airlines" are also increasing baggage fees, introducing additional fuel surcharges and reviewing the terms of promotional fares. Thus, the real price of travel is rising not only because of the basic fare, but also because of all the additional services that were often included in the ticket before.

"Fewer flights, less choice"

Along with the price increase, airlines are also starting to reduce the number of flights. "United Airlines" plans to cancel about five percent of the scheduled flights this summer, and according to "BNP Paribas" estimates, global schedules for April were reduced by approximately the same percentage compared to the initial plans. This limits the choice of passengers and allows prices to remain high due to less competition between individual routes.

On routes between Asia and Europe, the pressure is felt particularly strongly. The consulting company "Alton Aviation Consultancy" reports that the average fares for June are about 70 percent higher compared to the same month of the previous year, and on some specific lines the price increase exceeds 500 percent. The reason is not only more expensive fuel, but also redirected routes due to military actions, longer flight times and restrictions in airspace.

Analysts warn that it will take at least until July to stabilize oil supply chains and normalize the aviation fuel market. Until then, passengers should not expect rapid relief in terms of prices or the number of available flights – and airlines are clearly preparing to maintain the new, higher price level even after the crisis subsides.