It was widely reported this week that Delta Air Lines and US Airways lost money in the first quarter of this year, both noting operating losses in the millions of dollars.
The main reason cited was the high cost of fuel which peaked in March at about $110 per barrel and is currently holding steady at about $104. Yet signs point to heavy passenger demand despite rising airfares.
Demand for Summer Flights Strong
Despite ongoing concerns over fuel costs, carriers are optimistic. Delta, for example, stated it expects to turn a profit for the year – and both also cited strong demand going into the busy summer travel season, which airlines typically capitalize on with higher airfares.
More Airfare Hikes Predicted
This year is no exception. As airfare analyst Rick Seaney was first to report, there have already been three successful airfare hikes so far this year, out of six attempts – and half of those fare hike attempts were instigated by Delta. Seaney says, “It wouldn’t surprise me to see a couple more hikes – or at least attempts – before vacation season really kicks off.”
When Will Passengers Say Enough?
As for airline finances, one travel industry pundit cited strong demand to back his contention that the next two quarters will be “gangbusters” for the airlines. But will there come a point where airfare hikes become too much for summer travelers.
Rick Seaney says that could happen, and airlines will know precisely when that breaking point is reached: “When fares get too high, travelers will react by staying home,” said Seaney. “It’s really that simple.”