Airlines Expect Expensive Holiday Operations Amid High Fuel Prices

Airlines are expecting expensive holiday operations this year. Even if the demand for air travel is back, jet fuel is at its highest since 2014. Aside from the expensive holiday operations, carriers are also scrambling to meet the growing demand from travelers.

Airlines are trying to expand their manpower by going on a hiring spree. Airlines need flight attendants, pilots, reservation agents, and others for the coming holiday. On top of that, airlines have to deal with a tight labor market.

Expensive Holiday Operations

The rise in the cost of its holiday operations is threatening the industry’s possible return to profitability. The airline industry lost $35 billion last year slashing a decade-worth of profits.

It’s also a given that airlines are not the only ones affected. Passengers will eventually have to deal with more expensive ticket prices.

Delta Air Lines announced last month that their fourth-quarter performance will be affected by the soaring jet fuel prices. Frontier Airlines, on the other hand, announced on Wednesday that the company is already expecting fourth quarter losses due to jet fuel costs.

US jet fuel was at $2.27 per gallon on November 10. It has jumped by 25% from three months earlier. Savanthi Syth who is an airline analyst at Raymond James said that fuel prices is “definitely delaying the earnings recovery”. Syth added that “If it’s a slow burn, airlines can handle it. This move up in this short of a period is not good”.

Limited by Staffing Issues

Airlines are looking to take advantage of the holiday rush. However, the number of flights will still depend on their current workforce. According to Cirium’s data, US carriers are flying 6% less in November and December compared to its 2019 numbers.

But there are a few exceptions such as low-cost airlines Frontier and Spirit Airlines. Both budget airlines are flying with more capacity compared to their 2019 numbers.

Airfares

Good news for travelers, airfares haven’t caught up with the high fuel prices yet. The average cost of roundtrip tickets for this year’s Thanksgiving will be $290. That remains lower by 13% compared to 2019. However, even if airlines are still offering fare sales, bargain-basement fares started to fade in spring.