Air fares are set to soar just in time for the holiday season, as jet fuel pries rise to pre-pandemic levels, the United Airlines CEO warned on Wednesday.
Jet fuel prices are already up more than 100 percent compared to just one year ago, CNBC reports, with the price per gallon set at $2.3282 on Tuesday.
But Scott Kirby, the CEO of United Airlines, said that the prices may go up even further. He forecasted an average fuel cost of $2.39 a gallon in the fourth quarter of the year, as United expects a surge in bookings for the holiday season.
‘You know I think in the longer term, it’s always been the case at an airline that jet fuel prices go up, usually because demand is strong – and that’s going to be true again,’ Kirby told the hosts of CNBC’s Squawk on the Street on Wednesday.
‘Higher jet fuel prices lead to higher ticket prices,’ he said. ‘Ultimately, we’ll pass that through.’
United’s competitor, Delta Airlines, last week warned that more expensive fuel would eat at its bottom line by the end of the year.
But United was able to post a $473 million profit for the third quarter, which ended at the end of September, thanks to $1.1 billion it received in federal aid.
Company executives said they expect its 2022 costs – excluding the price of fuel – to be lower than 2019, before the government instituted pandemic-related travel restrictions.
Scott Kirby, the CEO of United Airlines, said in an interview with CNBC on Wednesday he expects an average fuel cost of $2.39 a gallon in the fourth quarter of the year, as United expects a surge in bookings for the holiday season
Jet fuel prices are up more than 100 percent from last year, according to CNBC, and are set to increase even more as the holidays approach
United executives said they expect its 2022 costs – excluding the price of fuel – to be lower than 2019, before the government instituted pandemic-related travel restrictions.
Kirby also warned in the interview that the federal government’s vaccine mandate could pose a risk to some of its rivals, which may force the airlines to cancel some flights amid a worker shortage.
American – the United States’ largest airline – and JetBlue have both set November 24 deadlines, sparking fears of mass cancellations if both are forced to fire workers who haven’t had the shot on Thanksgiving Eve.
Kirby added that more than 96 percent of its company’s staff is already vaccinated, as United imposed its own mandate in August, with an October deadline, which put employees at risk of losing their job if they did not get a shot or an exemption.
The mandate came a full month before President Joe Biden mandated that all federal contractors – including airline employees – be vaccinated by December 8.
‘Customers can book with confidence on United,’ Kirby said. ‘But if you’re booking on an airline that doesn’t have a vaccine requirement, they’ve got government rules they have to follow.’
This week, American Airlines and Southwest Airlines said they would not put staff members on unpaid leave if they are applying for or have received medical or religious exemptions to the vaccine – unlike United, which said employees with exemptions would be put on unpaid leave.
The airline has been temporarily blocked from doing so, however, amid a lawsuit from staff members over the practice.
Kirby’s warnings come just over a week after Southwest had to cancel hundreds of its flights, leaving passengers stranded.
Many had blamed a staff walkout to protest the vaccine mandate for the cancelations, but airline officials insisted the problems were ‘created by weather and other external constraints, which left aircraft and Crews out of pre-planned positions to operate our schedule.’
Southwest Airlines President Mike Van de Ven also told workers the airline was working to develop a plan to address several shortcomings, including tight staffing on weekends as well as chronic delays and cancellations, according to The Wall Street Journal.
‘We are still not where we want to be with staffing, and in particular with our flight crews,’ he said in a video message to his company. ‘We simply need more staffing cushion for the unexpected in this environment and we are bringing new people onboard every day.’
He added that Southwest ‘already made significant reductions from our previously published November and December schedules, and if we think we need to do more, we will.’
The warning comes just over a week after Southwest passengers were left stranded after the airline had to cancel hundreds of its flights
Southwest officials have since said the delays were not because of employees protesting the vaccine mandate, but were instead related to the weather
Meanwhile, the United States is scheduled to lift its March 2020 COVID travel ban on November 8.
Passengers with at least two shots of the vaccine, or one shot in the case of Johnson & Johnson, will need to have a Covid test within three days of departure and will not be required to quarantine upon arrival.
White House coronavirus response coordinator Jeff Zients said the Centers for Disease Control (CDC) will determine which vaccines qualify for travel.