US Airfares Remain High Despite Iran Ceasefire
US airfares remain high despite potential drop in oil prices following a lasting ceasefire between the US and Iran, experts say.
Airline industry analysts argue that even if crude-oil prices decrease due to increased supply from refineries and a decline in demand for jet fuel, travelers can expect continued elevated airfare costs.
The main reason for high airfares is not just the 30% increase in crude oil prices since January, but also the 65% jump in jet fuel prices, which accounts for about 10% of refined oil. The current global capacity constraints at Boeing and Airbus have delayed some aircraft deliveries.
Airlines like American Airlines, United Airlines, and Delta Air Lines are benefiting from higher airfares to offset their increased fuel costs. However, the volatility in jet fuel prices makes it challenging for them to predict future effects on their profits.
According to Louise Burke, global head of aviation at Argus Media, 'the more limited the product, the more vulnerable it is to these supply shocks.' Jet fuel prices have soared due to a substantial number of refinery closures and reduced output. A new refinery in west Africa has helped alleviate some shortages.