Airlines Cut Flight Schedules Amid Oil Price Pain

With the cost of jet fuel doubling since the start of the Iran war, airlines are starting to cut flight schedules just as the busy summer travel season approaches.Aviation analytics firm Cirium says airlines have cut their planned seating capacity for May by about 3 percent. Of the top 20 airlines in the world, 19 have cut their May schedules.Jet fuel prices and supply have been particularly affected by the war because the top three global exporters of jet fuel — China, South Korea, and Kuwait — are essentially out of business simultaneously. China has banned exports and South Korea has cut production because it cannot secure enough crude, while Kuwait is unable to ship its refined fuel out of the Persian Gulf.Data from the International Air Transport Association Jet Fuel Price Index reveals that the global price of jet fuel surged from nearly $100 a barrel late last year to more than $200 a barrel this month. Global jet fuel prices are up 105.1 percent year-over-year. North America has seen the lowest regional increase, though prices are still up 82.6 percent.Schedule impacts are being reported in all global regions, including North America, Europe, and Asia. Cirium says it is “extremely likely” that airlines will make further cuts moving forward.Delta had predicted 2.7 percent growth this year but now expects capacity to stay flat compared to last year. It has paused schedules to some smaller markets as well as those linking John F. Kennedy International Airport in New York to Houston, Memphis and Saint Louis, though it will continue to serve those cities through La Guardia.United had expected to grow passenger capacity this year but has trimmed expectations and now expects growth to be flat for the rest of the year. The airline warns that if fuel prices remain doubled it will add an extra $11 billion to its annual operating costs. “For perspective, in United’s best year ever, we made less than $5B,” United’s chief executive officer, Scott Kirby said in a March memo.Mr. Kirby has said his airline will bump fares by up to 20 percent this summer and that travelers have so far demonstrated a continued willingness to pay top-dollar to fly. But he says in his memo that it may be a challenge to continue passing through much of the increased fuel price if oil stays high. The airline is assuming that oil will hit $175 a barrel and won’t fall below $100 a barrel until the end of 2027.American Airlines has ended service to some smaller markets, including Columbus, Georgia; Del Rio, Texas; and Long Beach, California.Discount carrier Spirit Airlines has struggled mightily amid rising jet fuel prices. The Trump administration is reportedly considering a $500 million bailout package to keep the airline afloat. The Florida-based carrier has been in bankruptcy reorganization since August and fuel prices are adding new pressure.Air Canada is dropping service to JFK between June and October due to fuel costs.Airlines are looking for other ways to boost revenue, including raising fees for checked baggage. Some international airlines are adding fuel surcharges onto ticket prices.European airlines have been impacted more acutely by the disruption in the oil markets because the region gets much more of its oil from the Middle East. The head of the International Energy Agency warned last week that Europe could run out of jet fuel in about six weeks.Lufthansa announced on Tuesday that it plans to reduce its schedule by 20,000 flights through October in an effort to save jet fuel. The German airline said it was reducing the number of unprofitable short-haul flights. It has already canceled 120 daily flights and expects to release a full list of changes in the coming days.Dutch airline KLM is cutting fewer than 200 flights within Europe as it seeks to save money.Budget carrier Ryanair has not made widespread cuts yet but says it could suspend up to 10 percent of its flights if jet fuel prices don’t start dropping.Asia is also highly reliant on the Middle East for jet fuel. Cathay Pacific and Air India are among the airlines that are tacking on new fuel surcharges to ticket prices.Joseph Curl contributed to this article.

Airlines Cut Flight Schedules Amid Oil Price Pain

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