Market News

BY  Oliver O'Connell

The CEO of United Airlines has warned that as jet fuel prices spike, the cost of tickets for passengers will follow.

Speaking on CNBC’s Squawk on the Street, Scott Kirby said: “Higher jet fuel prices lead to higher ticket prices. Ultimately, we’ll pass that through.”

Airlines are expecting a surge in bookings as Americans begin to travel for the holidays and international Covid-19 restrictions loosen up.

United has forecast an average fuel cost of $2.39 per gallon for the fourth quarter of 2021, compared to $2.02 in the same period in 2019.

Mr Kirby pointed out that the welcome higher demand for flights from passengers also usually drives up fuel prices.

Airlines have been struggling to return to profitability as the pandemic wanes and travel picks up.

It was hoped that summer would have seen a return to a more normal operating environment, but the spread of the Delta variant both in the US and abroad lowered expectations.

United posted a $473m profit for the third quarter of 2021, but this was largely thanks to $1.1bn in federal aid.

Mr Kirby also told CNBC that air travel remains a relative bargain compared to pre-pandemic prices, and that will likely remain the case for a while.

He noted that frequently you pay more for a hotel room for a single night than you do for your air ticket.

Mr Kirby is bullish about his predictions for the holiday season, saying there will be full airplanes and robust demand.