Airline Ticket Prices Surge Sharply Due to Iran-US-Israel Conflict
Jakarta — Average airline ticket prices have surged since the conflict between the United States and Iran, according to industry executives. Price shocks have been particularly pronounced for trans-Atlantic and Caribbean routes, as well as several last-minute bookings.
Citing The Wall Street Journal, people booking travel around the United States have felt the impact of the conflict on jet fuel prices. Among nine US airlines, Spirit Airlines experienced the sharpest weekly tariff increase for domestic flights booked 21 days in advance. The lowest quoted one-way fares more than doubled from the previous week to US$193 based on booking data since 6 March. For other major airlines, including United Airlines and Delta Air Lines, domestic flight ticket prices booked well in advance increased between 15% and 57%.
Surging oil prices have become a contributing factor to the rise in airfare prices. “When prices rise this quickly, airfares rise too. However, ticket prices also fall when fuel prices come back down. That’s what always happens,” said United Airlines Chief Executive Officer Scott Kirby.
Airfare prices are typically influenced by more than crude oil price movements alone, including factors such as demand for specific routes and overall economic conditions. Rising fuel costs will not impact all airlines equally. Henry Harteveldt, founder of Atmosphere Research Group, noted that airlines with fuel-efficient aircraft, including United and Delta, may receive some protection.
“Airlines that rely on older or less efficient aircraft may be hit harder by the increase in jet fuel prices,” he said. Analysts at TD Cowen have downgraded revenue targets for several major airlines, which are also expected to revise their guidance next week.
“Airlines know that if they raise ticket prices too high, they’ll lose more sales than they gain,” Harteveldt said. He added that some travellers will postpone international holidays or choose domestic flights, whilst others will proceed with their previously scheduled travel plans.
Sam Alexander, a venture capital investor and frequent traveller, said he recently booked aircraft tickets for all his planned trips this year due to concerns about rising oil prices pushing up airfares. “I’m grateful to have gotten tickets at a good price a few days after the war started,” Alexander said. Two days after he booked a flight to Hawaii in April, the ticket price rose by US$400.
Spirit Airlines is still seeing strong demand and bookings for the spring holiday period, estimating travellers will fill most seats on flights in late March and early April. United Airlines Chief Executive Officer Scott Kirby revealed that United Airlines also recorded its largest booking total in history by revenue on Tuesday. “In the past, events like those in Iran would have impacted demand. The world has changed. People aren’t reacting as much as they used to,” he explained.