Delta CEO Says Cost of Oil Will Affect Ticket Prices

It was never a rumor or a supposition that rising oil prices would have an adverse effect on airline ticket prices. It was just a matter of when.

For Delta Air Lines CEO Ed Bastian, that when is apparently now.

In an interview with the British Broadcasting Corporation, Bastian said he can see airfares rising at least 10 percent.

“It really depends on where fuel prices settle,” Bastian told the BBC. “It’s probably about $25 on a (U.S. domestic) ticket, that could be anywhere between 5 percent to 10 percent at these high levels of oil.”

International airfare will likely be slightly higher than that.

Following Russia’s invasion of Ukraine that began on February 24, oil prices have skyrocketed. But Bastian and most aviation officials saw it coming before that.

Still, the airlines have been thrilled by the continued public response to travel and tourism and the pent-up demand that has arisen over the last year. With COVID-19 cases falling in much of the world, and entry requirements and restrictions being lifted, air travel is nearly back to pre-pandemic levels after two years of hell.

Still, lower oil prices would be a help instead of a continued hindrance. Cost per barrel is at its highest in 14 years and, aside from employee compensation, turning oil into jet fuel is the biggest expense for airlines.

So far, international carriers Emirates, Japan Airlines and AirAsia have put surcharges on their ticket prices to account for rising fuel costs, according to the BBC.

Delta plans to do the same.

“I think the $100 [oil] we are experiencing today may not be the highest level of prices we’ll be seeing in the next weeks,” Dr Fatih Birol, executive director of the International Energy Agency, told the BBC.