Jet fuel prices plunge, yet airfares expected to remain high

The US market offers the clearest example. Fare increases lag this year’s fuel cost run-up, and domestic seat growth remains limited. This gives airlines leeway to use lower fuel bills to rebuild margins instead of reversing recent price hikes. US jet fuel spot prices stood at $2.85 a gallon on June 17, down sharply from an early April high of $4.88. Sustaining this decline would cut the industry’s annual fuel bill by more than $40 billion, according to Reuters calculations. Fares still lag fuel As jet fuel prices surged, US airlines raised ticket prices, increased bag fees and cut schedules, but those steps offset only part of rising costs. Industry data show jet fuel prices rose more than three times as fast as airfares from January through May. Deutsche Bank estimated US carriers would recover only about 60 cents of every additional dollar spent on fuel, generating $14.4bn in higher revenue against $24.1bn in higher costs. Alaska Air reported recovering about one-third of the increase. Delta Air Lines, United and American Airlines put second-quarter recapture at 40pc to 50pc, while JetBlue Airways and Frontier Group expect to recover less than half. United CEO Scott Kirby told Reuters his airline is close to recouping the spike through pricing. Raymond James data show average domestic fares booked one week before travel were up 34.1pc year-on-year on June 8. The key question is whether airl