United Airlines CEO said U.S. airfares could soon rise as Iran war drives up oil prices
CBSN
Travelers could soon see a rise in U.S. airfares as rising global oil costs due to the Iran war boost the cost of jet fuel. Edited by Alain Sherter In:
Travelers could soon see a rise in U.S. airfares as rising global oil costs due to the Iran war boost the cost of jet fuel.
Speaking at an industry event on Thursday, United Airlines CEO Scott Kirby said rising fuel costs will have a "meaningful" impact on the carrier's financial results this quarter, CNBC reported. He also said the impact on air ticket costs will "probably start quick." United confirmed Kirby's comments with CBS News.
West Texas Intermediate, the U.S. oil benchmark, shot up more than 11% on Friday to nearly $91 per barrel after President Trump demanded Iran's "unconditional surrender," stoking investor concerns about a prolonged conflict. Brent crude, the international benchmark, jumped to $92.47, the highest level in nearly two years.
Jet fuel, which accounts for about one-fifth of airlines' operating expenses, on Thursday cost $3.95 a gallon, up 56% from $2.50 in late February, one day before the joint U.S.-Israel attack on Iran, according to the Argus U.S. Jet Fuel Index.
The Strait of Hormuz, a vital trade route in the Middle East for oil and liquefied natural gas, is effectively closed because of the war. That supply disruption is now causing "stratospheric moves in global jet pricing," James Noel-Beswick, head of commodities at market research firm Sparta, said in a client note this week.
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