A JetBlue aircraft lands under the DC skyline featuring the U.S. Capitol building, near United Airlines, American Airlines and Delta Airlines aircraft on the tarmac at Ronald Reagan Washington National Airport in Arlington, Virginia, U.S. January 25, 2025.
Jim Urquhart | Reuters
A U.S. lawmaker is urging the CEOs of the country’s largest airlines to lower prices if and when the cost of jet fuel declines after a massive run-up this year prompted carriers to raise surcharges, bag fees and fares.
“If airline pricing is truly tied to global fuel costs, then it must be truly responsive when those costs decline,” U.S. Rep Ritchie Torres, D-N.Y., wrote to the CEOs of Delta Air Lines, United Airlines, JetBlue Airways and Southwest Airlines, according to a letter that was seen by CNBC. “I call on you to publicly commit to lowering costs associated with air travel should jet fuel prices decline. The American people deserve fairness and pricing models that do not only reflect market conditions, but also economic justice.”
Fuel is airlines’ biggest expense after labor. Jet fuel reached an average of $4.88 a gallon in New York, Houston, Chicago and Los Angeles on April 2, according to Argus, up about 95% since the Feb. 28 attacks by the U.S. and Israel on Iran started. The climb was steeper in other regions that don’t produce as much oil or jet fuel as the U.S.
United declined to comment. The other carriers didn’t immediately respond for requests for comment.
Delta reported a $2 billion headwind from fuel this quarter and said it would “meaningfully” scale back its capacity plans, something other carriers are likely to discuss when they report results next week.
Lower capacity can drive up fares, especially if demand remains robust. A drop in fuel prices, meanwhile, can encourage airlines to expand capacity, doing the opposite to pricing.
When asked what will happen if fuel prices decline from recent highs, Delta CEO Ed Bastian last week said that “fuel recapture is going to be important. No matter what we do, and the degree in which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.”
Delta, United, Southwest, JetBlue, American Airlines and Alaska Airlines have all raised bag fees since the attacks began, while airlines around the world have posted higher airfare and surcharges.
Consumers willing to shell out more to travel have been driving the airline industry. Bastian last week told analysts that demand has held up.
“I think the higher-end consumer, the premium consumer is candidly immune or becoming more immune to the headlines and not delaying their investment in the experience economy, waiting to see what the next headline is going to be, on the margin,” he said.
