Taking a Delta flight could soon be heavier on the pocket as the airline looks to increase ticket prices in response to rising fuel costs. Airlines in the US are left with no choice but to pass down fuel price hikes to customers as elevated fares but are hopeful that renewed interest in traveling will see them through the coming few months.

Delta tickets to cost more

Delta Air Lines is looking to raise ticket prices to counter global fuel costs and resulting economic inflation. Ed Bastian, Chief Executive Officer of Delta Air Lines, said that passengers can expect increased fuel surcharge on international flights "as the market conditions permit," adding that rising fuels costs will raise ticket prices both domestically and internationally.

After labor costs, fuel is the second-biggest expense for US airlines. Unlike many carriers globally, airlines in the US are not hedged against rising fuel prices, leaving them at the mercy of global fluctuations.

Bastian finds the uptick in passenger numbers encouraging but feels it's a little early to draw any firm conclusions. A Financial Times report quotes him as saying,

“It’s a little early to tell what’s going to happen to oil prices and consumer demand over the summer. You’d never want to be in a position of cutting capacity when you’re having such robust demand.”

Delta Air Lines Boeing 737-800
Fuel prices are likely to affect both domestic and international fares of Delta Air Lines. Photo: Getty Images

Travel demand to offset fuel costs?

US carriers, like others around the world, are heading into the summer of 2022 with a mixed bag of emotions. While there's undoubtedly a sense of relief from diminishing COVID cases and rising travel demand, the Russia-Ukraine conflict has impacted fuel prices significantly.

However, there's nothing that makes airlines happier than getting more people on planes, a factor that significantly differentiates the present challenge from COVID. Delta is witnessing "unapparelled" demand, which resulted in the company's highest ticket sales last week. United and American Airlines, too, are encouraged by healthy ticket sales for the coming few months.

The upward trend has continued for weeks in a row. The New York Times cites an analysis done by the Adobe Digital Economy Index, which draws on online sales from six of the top ten US airlines. According to the report, travelers spent an estimated $6.6 billion on domestic flights in February, exceeding figures for the same month in 2019.

Airlines in the US are hoping that a rise in passenger volume will offset fuel price hikes. Photo: Denver International Airport

Revenue boost expected

Pleased by the willingness of passengers to spend on air tickets, Delta Air Lines predicts a profit for March (recovering to 78% of 2019 levels), while also expecting a quarterly pre-tax loss. Other airlines in the country share similar sentiments.

However, Robin Hayes, Chief Executive Officer of JetBlue, chooses to remain cautious, even amid spectacular demand for his airline in some sectors, signaling,

"We have to be a little bit cautious as we go into the second half of the year - what do we think the economy is going to do.”

Are you scheduled to take a Delta flight anytime soon? What are your opinions about the impact of fuel prices on US carriers?

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