A recent surge in fuel prices could lead to higher airfares for travelers. Over the past year, the cost of jet fuel rose by nearly 57 percent per barrel, and as fuel costs shift, airlines generally respond by raising ticket prices and adding or increasing passenger fees to offset the higher operating expenses.
This trend was highlighted at the International Air Transport Association annual meeting, where representatives noted that crude oil prices climbed above $75 per barrel and could reach $84 per barrel. Fuel typically represents about 25 percent of an airline’s annual operating costs—often the second-largest expense—so increasing fares and fees is one of the primary ways carriers try to manage sudden spikes in fuel bills.
Despite such measures, airlines still face the possibility of reduced profitability. Estimates presented at the meeting suggested that even after passing some costs on to passengers, airline profits could fall by as much as 12 percent for 2018.