You actually can afford to travel, just try using some of these tips when looking at airfares.
Traveling this year? Better budget more money for airfare.
American Airlines CEO Doug Parker said Thursday that higher ticket prices are likely on the horizon due to a surge in oil prices. Fuel is among airlines’ biggest expenses and is the single biggest expense when oil prices spike as they have in the past five months.
“Fares are too low for oil prices this high, and over time you’ll see that adjust, but it takes time,” Parker said on the airline’s earnings conference call.
Crude oil prices have gone from $50 a barrel to $70 in five months, Parker said. They are at a three-year high. That will cost American an extra $1.8 billion in fuel this year if prices remain at that level, eating into its earnings. The airline will try to close that gap with higher ticket prices.
One thing travelers shouldn’t expect: big cutbacks in flights due to higher oil prices, as has occurred in the past. The industry has significantly cut flights after mega-mergers like the US Airways-American deal in 2013, so there’s little fat and unprofitable flying in the system. Cutting flights would reduce earnings, Parker said.
American is the world’s largest carrier and the busiest carrier at Phoenix Sky Harbor International Airport, with more than 270 daily departures.
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