United Airlines warns that airfares could increase by up to 20% in fuel costs
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United Airlines warns that airfares could rise by as much as 20% if the cost of jet fuel remains high for a long time due to the increase in oil prices during the Iran war.
United CEO Scott Kirby said interview on Bloomberg TV On Tuesday, the airline expects that consumer demand for air travel will soften if higher fuel prices continue to push up ticket prices.
Kirby added that United has already moved to reduce its capacity by 5% on routes that are unprofitable and do not cover the cost of higher fuel prices, although he said demand is still very strong at the moment.
“Demand is incredibly strong right now,” Kirby told Bloomberg, adding that he thinks oil prices are “going to be high for a long time.”
UNITED DOUBLES DOWN ON PREMIUM TRAVEL, NEW STYLES
United Airlines CEO Scott Kirby said rising oil prices could increase air fares by as much as 20%. (Photos by AaronP/Bauer-Griffin/GC)
“It makes sense for us to plan that no matter what, because the drop is very small. If we leave a little demand on the table by not flying much this summer, then, that’s not a big deal. But it gives us more choice on the other side of the return,” he said in a speech.
Kirby said the company’s forecast for that oil prices it could rise to $175 a barrel and stay above $100 a barrel until the end of next year “it’s reasonable, I hope it’s better and there’s a good chance it’s better, but I think it’s reasonable.”
A United Airlines executive told Bloomberg that if oil prices rise as high as the company’s forecast, it will be a “depressing event” for the airline industry, and “will not be anywhere near the magnitude of what happened with COVID.”
UNITED AIRLINES SLASH FLASH FLIGHTS AS IRAN WAR SENDS FUEL PRICES DOWN
| A ticker | Security | Finally | Change | change % |
|---|---|---|---|---|
| UAL | UNITED AIRLINES HOLDINGS INC. | 93.56 | -0.40 |
-0.43% |
While other world airlines have historically fenced spikes in fuel costs about investment strategies, Kirby said in an interview that because of the size of the company “it’s really hard to hedge” because it moves the market when it tries to do so.
He said the company was focusing on its money and has tripled the amount of money it keeps on its balance sheet as another way to cover fuel costs.
Kirby added that if oil prices stay at their current level that equates to $11 billion in costs for United, which would mean a 20% increase. airfare for the company to break down and cover those costs.
UNITED AIRLINES CAN NOW REFUSE CARRIAGE TO PASSENGERS WHO CANNOT INSTALLE HEADLINES.
Kirby said United expects changes in demand that may occur if oil prices continue to rise. (Al Drago/Bloomberg via Getty Images)
He also pointed out that although the prices have increased compared to the previous year, the prices of flights in 2025 were 2% lower than in 2019, as inflation had increased by 25%, so the 15%-20% increase in flights in recent weeks “covers half to 60% of the inflation.”
Kirby was asked about the incident at LaGuardia Airport in New York City over the weekend, where he An Air Canada flight has crashed and a fire truck when the plane landed. Both the pilot and first officer were killed, and multiple injuries were reported.
He told Bloomberg that America’s air travel system is safe and “the safest way to travel on any mode of travel.”
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Kirby added that he thinks there should be more investment in technology and manpower Federal Aviation Administration (FAA) and that he sees the Trump administration as committed to those priorities, which the CEO said should have bipartisan support.
