With the cost of jet fuel at a 14-year high, airlines are having to make some difficult decisions to keep themselves in the air. Some airlines have had to cut services, whilst others warn of increased ticket prices.
Fuel costs put airlines in a tricky position.
Several North American carriers have said that they’ll be reducing their services to stay on top of rising fuel costs. Oil prices have been rising steadily over the last few years due to scarcity, but Western sanctions against Russia, a major oil supplier, have sent prices skyrocketing.
The war in Ukraine has caused jet fuel prices to rise by more than 35% in the past month, and last week, the spot market price was at 85% of pre-war levels, though it has settled down again since. Usually, fuel only accounts for 15-20% of flight running costs, but rising prices are putting a strain on airlines’ margins, and many are being forced to cut less profitable routes. Carriers are now faced with the difficult choice of either absorbing the costs or passing them on to the customers, potentially losing them business. In Nigeria, the fuel crisis has gotten so bad airlines have said they only have a few more days to fly.
Which airlines are cutting capacity?
Alaska Air will be reducing its second-quarter capacity by 5-10%, according to Bloomberg.
JetBlue announced in a stock exchange filing that they would also be reducing services:
“JetBlue is moving swiftly to reduce May capacity by 6-8 percentage points, and expects to continue to moderate its capacity outlook into the summer months,”
United have said:
“In response to several macroeconomic factors including rising fuel prices as well as expected aircraft delivery delays, the company has reduced its total capacity plan for the full year 2022 to be down in the high single digits versus full year 2019,”
Allegiant Airlines is also planning to reduce their second-quarter capacity between 5% and 10%, CEO Greg Anderson says.
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