Strong ticket sales help offset rising jet fuel costs, US airlines say

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US airlines told investors Tuesday that demand for air travel has helped cushion the financial hit from rapidly rising jet fuel prices linked to the war that began Feb. 28 in the Middle East.

At the annual J.P. Morgan Industrials Conference, Delta Air Lines CEO Ed Bastian said the strength in bookings has offset higher fuel expenses, which he said have driven jet fuel costs materially higher since the start of the conflict.

Bastian said jet fuel prices rose to $3.93 a gallon on Tuesday, up from $2.50 the day before the war began, citing Argus Media. He added that the higher prices amount to roughly $400 million in additional costs so far for Delta.

Bastian said the airline has seen broad-based sales strength, noting that “It’s across all segments, covering corporate, covering international, covering premium leisure, covering main cabin, covering our domestic system,” and that Delta is “We’re seeing strength in every market that we look at.” He said eight of Delta’s top 10 days for ticket sales have happened this year, five of them since the war began.

United CEO Scott Kirby said the first 10 weeks of the year were United’s top 10 weeks for ticket sales and that the past two weeks were the strongest on record. Kirby’s comments were part of the same investor presentation in which executives discussed how higher fuel costs are affecting airline margins and guidance.

American Airlines CEO Robert Isom said eight of American’s best 10 days and weeks for bookings also happened this year, and he said he expects high demand to continue through April and May. Isom said the company would be “nimble” in managing capacity to keep “supply and demand stay in balance.”

The executives’ remarks come as the war has strained global oil supplies, particularly around the Strait of Hormuz, a narrow waterway through which about one-fifth of the world’s oil passes, according to the discussion shared with investors. With volatile crude prices feeding into energy markets, jet fuel has moved higher as one of the airline industry’s largest operating expenses, typically making up about a quarter of operating costs.

Industry analysts said it is not a question of whether airfares will rise because of the fuel increases, but when, for how long and by how much—an effect expected first on long-haul international routes that burn more fuel per flight. The article noted that some non-U.S. carriers have already introduced fuel surcharges or raised ticket prices, while U.S. airlines are more likely to build costs into base fares or adjust fees for add-ons such as seat upgrades.

The executives also discussed that some airlines use fuel hedging, which can lock in prices months or even years in advance, but the protection is incomplete for many carriers. If jet fuel prices remain elevated, the airlines said they may also adjust schedules or reduce certain routes to limit costs.