AA predicts rising fares as oil goes up

 

American Airlines CEO Doug Parker thinks that airfares may take off soon, just like the plane in the picture—moving up, but not at a sharp angle.

In a conference call for stock analysts and the press, Parker revealed a 45% drop in profits, to 'only' $186 million for the first-quarter. He pointed to a 40c per gallon rise in aviation fuel prices, and said "If indeed this is where fuel prices are going to stay, I would expect you would see higher fares to consumers over time."

Fuel costs, the second-biggest item in airline budgets after wages, had been at historic lows for the past couple of years, giving the airlines a break from bad years with high costs, and most of them managed record profits. It's a hard habit to break, and rising fares would be a way to maintain it.

But Parker doesn't expect the prices to rise enough to dampen customers' enthusiasm for flying. One hedge against that: American, like a number of other airlines, has been replacing older, thirstier planes with newer jets that burn less, so the 26% rise in fuel costs isn't likely to push fares up that much.

The best part of every trip is realizing that it has upset your expectations

Add Comment

Comments (0)

Post
×
×
×
×