Get ready for higher fares: Airlines bet surge in travel demand will help offset fuel costs

Travel demand has bounced back faster than expected this year, major airlines said Tuesday, a welcome trend for an industry battered by Covid and a sign that carriers expect to pass along higher fuel prices and other costs on to customers. US jet fuel prices last week surged to 2008 highs, propelled by Russia’s invasion of Ukraine, which sparked worries about scarcer crude supplies as countries sanctioned the oil producer. Though jet fuel prices have eased, they’re still up 35% so far this year. The mix of stronger demand and higher costs is promising more expensive tickets, which were already on the rise before Russia’s attack on Ukraine and generally rise during peak spring and summer travel periods. “We are very, very confident of our ability to recapture over 100% of the fuel price run-up in the second quarter and through probably the end of the summer,” Delta President Glen Hauenstein said during a JPMorgan investor conference. Customers last month spent $6.6b on airline tickets on carriers’ websites, the first time in the pandemic both bookings and sales surpassed a similar pre-Covid month, Adobe said Tuesday. Average fares sold by US travel agencies rose to $464 in February from $409 a month earlier, according to the Airlines Reporting Corp. Delta reiterated that bookings are outpacing 2019 and Hauenstein said the airline last week had its highest one-day cash sales in its more than 90-year history. Delta said it expects Q1 sales to come in at 78% of 2019 levels, up from its forecast in January for a recovery of as little as 72% of 2019 levels. (Airlines have been comparing revenue and capacity to 2019 to show how much they have recovered since before the pandemic.)<br/>