It looks like this effort may stick. Airlines aren’t always successful in raising fuel charges. It all depends on whether competitors match. In this latest round, Continental Airlines led the way, doubling its fuel surcharge late last week. What was $20 for a domestic round-trip ticket is now $40.
Over the weekend, American Airlines, United Airlines, and US Airways matched Continental’s move, thus putting pressure on other carriers to do the same.
Some context. The Air Transport Association, an industry trade group, says “At a consumption rate of 19 to 20 billion gallons per year, every penny increase in the price of a gallon of jet fuel drives an additional $190 to $200 million in annual fuel costs for U.S. airlines.”
Consider the possibilities. ATA says, “Were the price of jet fuel a dollar higher over the course of one year, that would translate into $19 to $20 billion more in operating expenses.”
The ATA Quarterly Airline Cost Index says fuel now constitutes the industry’s largest cost, making up between 20 and 30 percent of U.S. airlines’ operating expenses.
In 2000, a barrel of crude oil cost $30.38. In 2007 it was more than double that, $72.34 according to the Energy Information Administration.
© Cheapflights Ltd Jerry Chandler
