Jet fuel prices roughly doubled in the early weeks of the Iran war, prompting airlines to pass the costs on to consumers through increased fares, fewer flights and higher baggage fees.
“We had no choice,” Delta CEO Ed Bastian said last week, citing the nearly $2 billion that major carriers like Delta had to pay for price hikes in fuel this quarter.
But fuel prices have actually dropped over the last two months, and airlines don’t plan to roll back any of the increased fares and fees. Bastian said fares are at the “right level” despite “meaningfully” lower costs.
The sustained high fares are mostly due to strong demand — people are simply willing to accept price hikes during the busy summer travel season. And there are fewer seats available.
The same supply-and-demand issues keeping fares higher sent the price of jet fuel lower. There has been less demand for jet fuel because airlines cut back on flights, and at the same time, US refineries were producing more jet fuel to cash in on higher prices, said independent oil analyst Tom Kloza.
