Jet fuel prices just jumped 80%. Will airline tickets get more expensive next?

"The war in Iran has sent fuel prices surging. On Friday, spot prices for jet fuel were nearly $4 per gallon, up roughly 80% from a month ago, when they were hovering around $2.25. The price increases are a result of the just-begun war in Iran, which has caused shipping and production stoppages and delays."

"Traditionally, fuel costs amount to somewhere in the neighborhood of 20% to 30% of costs for carriers. Given the total increase in fuel costs, Reuters estimates that the cost to the four big U.S. carriers-Delta, United, Southwest, and American-could amount to an extra $5.8 billion in aggregate if prices remain at current levels for the rest of the year."

"At the same time, airlines are seeing higher demand than they were a year ago. Data from the International Air Transport Association (IATA) shows that during January, the number of airline passengers was up almost 4% year over year, while demand for air cargo was up 5.6%."

Jet fuel prices have increased nearly 80% in one month to approximately $4 per gallon due to the Iran conflict, causing shipping and production disruptions. Simultaneously, airline passenger demand rose 4% year-over-year in January, with cargo demand up 5.6%. The conflict has prompted some airlines to cancel regional operations, further reducing supply while demand remains strong. Fuel typically comprises 20-30% of airline operating costs. Reuters estimates the four major U.S. carriers could face an additional $5.8 billion in costs annually at current price levels. Airlines have begun signaling that higher ticket prices will likely follow, with executives publicly acknowledging anticipated fuel cost impacts on profitability.

Read at Fast Company