United CEO Scott Kirby argues that surging fuel costs aren’t entirely responsible for higher airfares. Instead airlines are capitalizing on more pricing power driven by ballooning operating costs and a readjustment in domestic capacity.
Airlines are betting that they can hold onto their pricing power even as the price of fuel decreases due to strong demand and fewer competitors in the industry.
Although Spirit was a small airline, it had a sizable impact on airfares across major markets in the U.S. Now that it has shut down, industry experts say to expect more airfare increases compounded by high fuel costs.
In just the span of two months fuel costs are up more than double since the start of the Iran war, according to new data from the Department of Transportation.