US airlines increase fares in expectation of higher fuel costs

by Emily DUNBAR on February 29, 2012

U.S. airlines have blamed soaring fuel prices for a rise in fares.

Although fares normally rise as summer draws closer, ticket prices could increase faster than in other years, according to analysts. Airlines have already enforced two major price increases in the first two months of 2012 alone, when leisure travel is famously slow, a development that Rick Seaney of described as a sign of things yet to come.

Seaney warns that fliers will see gradual increases then much bigger jumps throughout April and May, which is when people generally start looking for summer travel season flights. Airlines for America has reported that between January last year and January 2012, the average fare increase 9 per cent.

It is no secret in the industry that fuel has been the main driver of the increases, with the spot price of fuel for jets rising 18 per cent across the same mentioned period, according to official government figures. US carriers burn a staggering 48 million gallons a day between them, which unsurprisingly means that fuel is their biggest expense.

As there is little that the airlines can do about any rises in the price of fuel, the simplest response will always be to raise fares – something they did almost a dozen times in 2011. Airlines are to respond to higher fuel prices in 2012 by not just boosting fares but also running fewer sales and taking some flights off their rosters, predicts Michael Linenbrg - a Deutsche Bank analyst.

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