Boeing B777 passenger airplane of the US airline carrier UNITED. (Photo by Nicolas Economou/NurPhoto via Getty Images)
United Airlines warned Tuesday that airfares could rise as the war with Iran drives up oil and jet fuel prices, adding new cost pressure on carriers already bracing for higher summer travel demand.
What they're saying:
Kirby warned that persistently high jet fuel costs could drive fares up by as much as 20% if expenses don’t ease soon.
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The airline is expecting "some consumer pushback" and fewer people to travel if ticket prices continue to rise, Kirby said in a Tuesday interview with Bloomberg TV.
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Iran war: Oil prices expected to surge once again
We are now hearing that United Airlines will be cutting flights as soaring fuel prices tied to the Iran war hit carriers in the United States. They become the first major U.S. airline to announce a cut to capacity after weeks of industry warnings in the wake of conflict in the Middle East. LiveNOW’s Andy Mac is speaking with Chief Energy Advisor with Gulf Oil, Tom Kloza, after reports that Iran hit a Saudi refinery in the Red Sea and set Qatari liquefied natural gas facilities and two Kuwaiti oil refineries on fire.
Jet fuel prices rising
Dig deeper:
Jet fuel prices are rising as the war in the Middle East disrupts global oil supplies, putting cost pressure on airlines as the busy summer travel season approaches.
Experts say it’s not a question of if airfares will go up, but when, for how long and by how much. The impact may be felt most on long-haul international routes, which burn significantly more fuel than shorter flights.
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Some airlines are partially protected from sudden price spikes through fuel hedging, a strategy that allows them to lock in fuel prices months or even years in advance. But not all airlines hedge, and those that do are usually only protected for a portion of their fuel needs, meaning prolonged price surges may cause more carriers to raise fares.
Why you should care:
Travelers may feel the impact in several ways.
Airlines can add or increase fuel surcharges, an extra fee common among carriers outside of the U.S. that’s added on top of the base ticket price.
Major U.S. carriers, however, don’t charge a separate fuel surcharge. Instead, they build fuel costs into the overall ticket price, meaning any increase is more likely to show up as a higher base fare for travelers, according to Tyler Hosford, security director at global risk management firm International SOS.
Airlines also may adjust what they charge for premium add-ons — such as seat upgrades, extra legroom seats, checked bags or priority boarding — as another way to offset higher operating costs. For consumers, that means even if the base fare doesn’t rise immediately, the total cost of a trip could still increase once additional fees and upgrades are factored in.
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What can travelers do to keep costs down?
What you can do:
Experts say travelers planning summer trips may be able to limit the impact of rising airfares by booking earlier rather than waiting for last-minute deals.
Locking in ticket prices sooner — especially with flexible booking options that allow changes — can help secure lower prices before airlines adjust rates further.
Hosford, the security director at International SOS, suggests travelers stay flexible with travel dates, check fares at nearby airports and set alerts for price drops. He also recommends using frequent flyer miles or credit card points to book flights instead of holding out for a "perfect deal."
"If you were going to spend cash on the flight but now you’re not, then that’s a good redemption deal," he said.
The Source: The Associated Press contributed to this report. The information in this story comes from a combination of sources, including comments from United Airlines CEO Scott Kirby in an interview with Bloomberg TV. This story was reported from Los Angeles.