American Airlines’ CEO Warns That Higher Fares Are Coming

Doug Parker has some bad news.

Fuel prices are on the rise. And if they keep going the way they’re headed — up 40 cents a gallon so far from a year ago — ticket prices are going to have to climb up too.

“If indeed this is where fuel prices are going to stay, I would expect you would see higher fares to consumers over time,” Parker said Thursday on a call with analysts and reporters.

It’s not a huge surprise. Fuel costs are an airline’s second-biggest expense after labor. And so far this year, climbing fuel prices are to blame for a 45% dip in first-quarter profits (down to $186 million), Parker revealed. And that’s despite American Airlines’ efforts to counteract the high costs by investing in more fuel-efficient planes.

How much fuel, exactly, does an airline like American Airlines use? Just over 1 billion gallons in this past quarter. And with fuel costs at an average of $2.10 per gallon, up from $1.70 last year, they spent $412 million more than they would have.

But, don’t expect a huge jump in fuel prices by tomorrow. Ticket prices will eek up over the next few months by just a few percent. But, if you’re looking to save a little, it couldn’t hurt to purchase your flights sooner rather than later.

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