However, with fuel prices playing such a critical role in current profitability models for carriers and pricing for consumers will airlines pay for an extra 2% fuel burn? In this exact example, American Airlines was the test operator. Last year, the carrier spent $10.72bn on fuel related expenses. A 2% increase in fuel costs without a corresponding increase in pricing (which would be tough to sustain as the rest of the market won’t rise in lockstep) would cost $214MM. Last year, American netted just $111MM in profit for the year, this change (if rolled out fleet-wide) would move it to a loss for the year on $54bn in revenue.
What do you think?
A great solo travel tip spotted this week on Live and Let's Fly.
