Despite Recovery Indicators, Airlines Weigh Cutting Flights Due to Fuel Prices

Bloomberg reports both Alaska Airlines and low-cost carrier Allegiant Air will scale back their flights due to jet fuel prices increasing significantly.

Increased Fuel Prices Create Uncertainty in Post-Pandemic Recovery Plans

With global energy companies electing to cancel business with Russian oil producers and the White House banning oil imports, fuel prices have increased significantly overnight. While consumers are paying more for gas at the pump, airlines are paying the highest cost for jet fuel since 2008.

As a result, both airlines headquartered in the Western U.S. say they will look to reduce their overall schedule. Alaska Airlines says they may cut flights by around 5% through the second quarter of 2021, while Allegiant is looking to drop as much as 10% of their flights.

The hit for Alaska comes after a rough winter, when the carrier was forced to cancel flights due to staffing issues. In January 2022 alone, the airline cut 10% of their schedule during the month while reducing in-flight services, as flight attendants called in sick due to COVID-19 infections.

For Allegiant, their challenge lies in the economics. As a low-cost carrier, the airline depends on ancillary fees to remain profitable. If consumers are worried about how the cost of fuel will affect their budget, they may choose to stay home – resulting in a loss for the airline. American flyers paid the most in ancillary fees in 2020, with North Americans paying up for extras accounting for 33.5% of all ancillary sales worldwide.

Experts Say Pain at the Pump Will Extend to Flight Prices

Just as filling up a car is skyrocketing in price, experts say airlines may soon pass those fees on to passengers as well. Speaking to Fox News, a spokesperson for AAA says airfare prices could start to increase if crude oil prices climb. If crude oil continues to go up in price due to the Russian-Ukrainian war, the spokesperson says look for prices to increase “…in major markets where lift is limited and demand is high.”