Experts were expecting a massive resurgence of travel this summer. But now fuel costs are skyrocketing, hitting the highest costs of all time in the US. The war in Ukraine is raging and some countries, like the US and UK, are turning away from using Russian oil. The cost per barrel of oil is up to $130 as I write this, and I’m sure it will be higher when you read it. Why does this matter? It’s going to be yet another hit to the already battered travel industry. Sure, a lot of this sounds like boring geopolitical play-by-play but as Americans and Europeans alike are realizing is that; this is going to hit our pockets.
Airlines Are Raising Prices
A local Massachusetts travel agent, Doreen Coakley Rodriguez, said that over the past week and a half as she’s booking flights for her customers, she’s noticed the cost of airline tickets going up.
“Their prices are changing overnight, so people that came in yesterday and are coming in today, it’s moving and moving fast,” Coakley Rodriguez explained.
Not to be alarmist, but the increase in fuel prices will undoubtedly be passed on to the consumer. Airlines already run on a pretty thin profit margin on a per passenger basis, so with a fuel increase, they’ll pass the difference on to you. Malaysia’s AirAsia on Saturday introduced fuel surcharges on tickets for the first time since 2015. Chinese airlines, meanwhile, raised fuel surcharges on domestic routes and Emirates, Japan Airlines and ANA have also raised surcharges recently.
We’ll likely see airlines in the US and Europe attempt to keep some of the costs from hitting travelers directly, at least for this coming summer season. But if the war and the embargo on Russian energy continues for long, there wont be much of a choice but to increase prices.
AAA spokesperson Mark Schieldrop said, “Airlines are in a difficult position because they don’t want to alienate their customers. If they raise prices to cover the cost of the fuel increase 100 percent, they may be pricing people out of the market. It’s a fineline airlines have to walk in order to absorb some of the costs, but at the same time, not make flying so expensive that they undermine their business,”
You can currently still find some flight deals if you look hard enough to popular destinations in the US, Mexico and Caribbean.
Ryanair Says No Way
Ryanair CEO Michael O’Leary has already stated that the company will not be raising fares for this summers tourist season. Citing that the company already has 80% of the oil it needs to operate for the next twelve months. Though, the company will take a 50 Million dollar hit from the fuel increase.
He said, “I think it’s going to be very difficult for most airlines for the next 12 months,” This is likely because most airlines do not hedge their oil costs in advance.
If you’re planning to adventure through the fast opening countries of Europe this summer, take advantage of Ryaniar’s low costs while you can!
Silence From The US…
So far, no major US airline has come out and commented on the situation of rising fuel prices and how it will affect travelers. The airline industry is dying to get back to pre-pandemic levels of international travel and could possibly subsidize the fuel costs to make growth more realistic.
Still, I recommend booking your flights sooner rather than later. The longer this war lasts, the more of an impact it will have on airfare in the long run.
