Delta CEO Expects 10%+ Hike In Already Sky High Airfare This Summer
Oil prices have reached 14-year highs as Russia invaded Ukraine. Prices have skyrocketed in recent months, and especially over the last few weeks. The Brent crude oil price jumped over $132 a barrel in early March. It then dropped briefly under $100 and now is spiking up again over $100 as the European Union considers a Russian oil ban.
The jump in oil prices has seen gas prices go up as well. Currently the average price for gasoline in the US is $4.25 for regular. It’s down from $4.32 a week ago but it was at $3.53 a month ago and $2.88 a year ago.
As you would expect, more expensive gas prices make travel more expensive as well. That includes air travel, which is already seeing a boom in demand after two years.
Delta Air Lines CEO Ed Bastian is predicting just that. He says that he expects airline ticket prices to jump by at least 5% to 10% this summer. But the final impact “really depends where fuel prices settle”, he told BBC.
So far, international carriers Emirates, Japan Airlines and AirAsia have added surcharges to their ticket prices to account for rising fuel costs. And Delta plans to do the same.
The airline does have an advantage. It owns a oil refinery in Pennsylvania, although it has been unsuccessful in recent efforts to try to sell it, BBC reports. “We’re thrilled that we have it right now” says Ed Bastian.
Last year Delta recorded a pre-tax loss of $3.4bn. The spike in COVID-19 cases in early 2022 will probably add to those losses. “We will lose some money primarily because of Omicron, it’s not fuel prices. But I do expect starting in the second quarter and beyond that we’ll be profitable,” Mr Bastian said.
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