An increasing number of airlines are being forced to hike up their prices due to the rising fuel costs associated with the ongoing Middle East conflict. This is being seen through increases in the price of add-ons, such as luggage, as well as directly in airfares.
Several airlines in the United States, including United Airlines, Delta, Southwest, and JetBlue, have increased luggage prices, while others may be forced to do so in the coming months if the global fuel market does not soon stabilize.
Global Energy Shortages and Higher Fuel Prices
The U.S.-Israeli attack on Iran and the ongoing conflict in the Middle East have spurred the biggest oil disruption in history, according to Rapidan Energy. Global oil and liquified natural gas (LNG) trade has been severely disrupted, with the oil supply being reduced by around 20%, due to the almost complete closure of the Strait of Hormuz – a key trade corridor connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.
This has resulted in oil prices rising again and again since the start of the conflict. Oil prices rose by around 50% between late February and early April, as several countries faced severe energy shortages. While the agreement to a two-week temporary ceasefire on April 7 led to an initial drop in oil prices, there is still great uncertainty over what the coming months hold.
The Rising Price of Jet Fuel
This has also led to a rise in the price of oil-related products, such as fertilizer and jet fuel. On average, jet fuel contributes around 20% to 40% of most airlines’ operating costs. In the first week of April, the benchmark European jet fuel price hit an all-time high of $1,838 per metric ton, compared to $831 before the war began. Between January and March, fuel prices rose by 14%, compared to the same period last year, hitting $2.7 billion, Delta told investors on April 8.
The rising price of jet fuel has led several airlines to increase the price of tickets and add-ons, with analysts warning consumers that the worst may be yet to come. The Gulf region supplies around 50% of Europe’s jet fuel imports, although much of the jet fuel supply in the United States is domestically produced or comes from Canada.
Nevertheless, due to global shortages, U.S. jet fuel prices have also increased, with fuel prices in Chicago, Houston, Los Angeles, and New York averaging $4.88 a gallon on April 2, which is almost double the price of the day before the start of the war.
Airlines Increase Fare and Luggage Prices
On April 3, United Airlines put its checked bag fee up by $10, in a bid to contend with the rising fuel costs, increasing its fee to $45 to check a first bag on most domestic routes, as well as to Canada and Latin America, if the traveler pays in advance, and $50 if they pay within 24 hours of the flight. This is the first time since February 2024 that United has increased its checked bag fees.
JetBlue Airways increased its checked bag fees by between $4 and $9 per bag that same week. “As we experience rising operating costs, we regularly evaluate how to manage those costs while keeping base fares competitive and continuing to invest in the experience our customers value,” JetBlue said in a statement.
Several other airlines initially held off on price increases but have since followed suit. Delta and Southwest have both announced that fees for first and second checked bags, for domestic and some short-haul international routes, will rise by $10 on new bookings, increasing the cost to $45 for the first bag and $55 for the second. The price for taking a third bag with Delta will also increase from $50 to a huge $200.
Some customers are finding ways to avoid the extra charges by using credit cards that offer a free checked bag when they book a flight or by booking first- or business-class seats, which come with a larger baggage allowance.
Increasing the price of add-ons, such as choosing to take a checked bag, has allowed airlines to avoid increasing overall fare prices so far, helping to keep flights accessible. JetBlue explained, “Adjusting fees for optional services used by select customers, such as checked baggage, allows us to continue offering more competitive fares while delivering the onboard experience our customers love, including complimentary snacks and drinks, unlimited, high-speed Wi-Fi and seatback entertainment screens.”
While airlines in the United States have so far followed this pricing model, airlines in other parts of the world, such as Europe and Asia, have been forced to increase their overall fares for flights to tackle severe oil shortages and rising jet fuel prices. Depending on how long the conflict continues, the same may eventually be true for U.S. airlines.
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