Rising Jet Fuel Costs Send Airline Fares Soaring
Global airfares are on the rise just as many travelers are set to begin their Easter and seasonal vacations. The higher cost for an airline ticket is being blamed on rising crude oil and jet fuel prices.
Airlines are bracing for a tough year as higher jet fuel prices put a squeeze on profits. In order to recoup higher fuel costs, air carriers are raising ticket prices on travelers, like Brian Blair.
"Airfares, for me, have gone up maybe five to 10 percent in the last few months," said Blair.
Industry analysts say U.S. airfares are up 4 percent this year, while international ticket prices have increased even more.
"We're seeing a lot of $400 plus (and higher) fuel surcharges and it doesn't bode well for the summer (travel season)," said Jeff Klee, who runs a online travel company. He said people will pay higher fares this year because airlines are trying to offset rapidly rising jet fuel prices.
"Every time the price of oil rises by $1, that costs the industry $1.6 billion," said Klee.
Jet fuel is the biggest expense for airlines, accounting for roughly 35 to 40 percent of operating costs. The higher cost to fly comes as seasonal travelers begin heading off to vacation destinations. George Hobica studies airfares and said that, in some cases, airline tickets could be 100 percent higher.
"I think consumers are going to see fares that they haven't seen in years. I think consumers have to re-think what a low airfare is," said Hobica.
Frequent business traveler Ines Lormand is worried about soaring airfares. She recently paid more than $1,000 for a flight from Houston to Detroit.
"The prices will continue to go up and it is going to squeeze my travel budget. Somehow I don't know what we are going to do," she said.
International airline Cathay Pacific, Hong Kong's largest, saw its profits drop 61
percent last year, hurt by high fuel prices and a weakening economy in China.
To try to counter higher fuel costs, more airlines are purchasing new fuel efficient
planes and looking at ways to use alternative biofuels to reduce costs.