U.S. Jet Fuel Hits Record $4.90 a Gallon as Holiday Airfares Climb 20–30%
Why It MattersRecord fuel costs are shifting airline economics toward higher fares and earlier bookings, a cost squeeze that could carry into next year, particularly in Europe.
The average price of jet fuel in the U.S. reached $4.90 per gallon on Thursday, according to the tracking firm Argus, the highest single-day average the firm has recorded and more than twice the price a year earlier. Fuel is one of airlines' biggest expenses, and carriers are passing part of the increase on to passengers.
Hayley Berg, lead economist at the travel tech company Hopper, said airfares are at a 10-year high. Thanksgiving fares are up about 30% from last year, and Christmas fares are up more than 20%. Berg said holiday travel is "sticky" and travelers are so far willing to pay for their big holiday trips, while shopping around more and booking earlier, with more holiday bookings already made in September.
Delta Air Lines CEO Ed Bastian said in an earnings call this month that consumers have shown a "limited amount of resistance" and still view airfare as reasonably affordable. Chris Sununu, head of the trade group Airlines for America, said airlines are absorbing most of the fuel cost, but some must be passed on, producing a 20–30% increase heading into the holidays.
Ryanair CEO Michael O'Leary said European airfares could rise 10%, 15% or perhaps 20% next year, and predicted the biggest increase in airfares in history in Europe over the next 12 months. The U.S. may fare slightly better because it has more oil-producing and refining capacity than Europe.
At Baltimore/Washington International Airport, travelers described the impact. Herb and Latasha Williams, who flew from Dallas, paid a couple of hundred dollars more than expected, and Latasha Williams is unsure they can afford holiday travel. Rachel Stern of Frederick, Maryland, said she will drive to Chicago because tickets for her and her children cost too much. Mary Haller of Bethany Beach, Delaware, said economy tickets to Europe had risen significantly in two weeks, but she plans to buy them anyway.
