US airlines prioritize higher fares as fuel costs squeeze profits

US airlines are favoring higher ticket prices over filling more seats as fuel costs squeeze profits.^[1]

American Airlines Group CFO Devon May said fares would likely remain elevated even if oil prices fell, citing the carrier's $1.9 billion in fuel costs; that is his expectation for pricing.^[2]

This pricing choice means accepting some empty seats in pursuit of more revenue per passenger. To protect profits, the extra revenue from higher fares must cover the fuel-cost pressure and any bookings lost because tickets cost more.^[1]

If fuel costs fall while fares hold up as May expects, the gap between passenger revenue and fuel expense could widen. The benefit still depends on how many travelers are willing to pay those prices.^[2][1]

Impact

• US passenger airlinesNeutral

  American and its peers are weighing higher fares against the number of seats sold. Carriers that sustain bookings have more scope to pass fuel costs to passengers; empty seats can erode the benefit if price-sensitive travelers pull back. Lower fuel costs alongside sustained fares could improve profits.^[1][2]