Higher airfares are expected as a result of the skyrocketing cost of jet fuel due to the war in Iran. However, even as fuel prices begin to decrease, it is unlikely that ticket prices will also go down.

The increase in airfare can be attributed to both the high demand for travel and the cost of fuel. Despite the higher prices, airlines are experiencing record numbers of bookings from passengers. As long as there is a steady flow of customers, it is likely that the higher fares will remain in place.

During an earnings call, United CEO Scott Kirby stated, “The longer consumers pay these prices and airlines get used to this revenue stream, the more likely it is (to hold). ” On average, United passengers are now paying 20% more per mile compared to last year.

American Airlines CEO Robert Isom also expressed confidence in maintaining higher fares, citing customers’ willingness to pay for additional amenities such as extra legroom or seats closer to the front. He also noted that summer bookings have remained strong despite the fare increases.

The cost of jet fuel has doubled since the beginning of the year, making it the second largest operating cost for airlines after labor. The four largest carriers in the US – United, American, Delta, and Southwest – collectively spent $100 million per day on fuel last year. With the significant increase in fuel costs, the airlines are passing some of the cost onto consumers. Fares have already gone up by 20% compared to last year, and are projected to continue rising.

Southwest Airlines’ Chief Operating Officer Andrew Watterson informed investors that there have been five industrywide fare hikes so far this year, with more to come. However, the airlines have only recovered a portion of their increased costs.

While fares are influenced by operating costs, they are primarily determined by demand for a particular route, time of day, and competition. For example, midweek or overnight flights are typically cheaper than prime travel times, and popular long-haul routes between major cities tend to have lower fares compared to shorter routes with less demand.

To offset the impact of higher fuel prices, some airlines have cut less profitable flights. United, for instance, has reduced its planned schedule by 5% through September. Removing these lower-priced flights has contributed to the overall increase in fares. However, with travelers still booking tickets, airlines are confident that the higher fares will stick.

Southwest’s Watterson stated, “The fare environment will ultimately play out based on market conditions. ” There is also a possibility that budget airlines, such as Spirit Airlines, may struggle to survive under the weight of higher fuel costs. In March, Spirit warned that it may go out of business, and the Trump administration has considered bailing it out or purchasing the airline to keep it afloat.

It is uncertain how long the higher fares will remain in place, and there has been public criticism of airlines attempting to maintain fare hikes even as fuel prices decrease.