Folks, I almost spilled my coffee reading this one. Delta Air Lines just reported a huge jump in fuel costs, but despite that, passengers are still booking flights like crazy, even with significantly higher airfares. I mean, who doesn’t love paying more to fly, right? The airline said its jet fuel costs jumped a whopping 60%, which is a $1.6 billion increase in the third quarter compared to last year. That’s a lot of dough, if you ask me. But hey, at least they’re not raising fares too much… just 15% more to fly, which led to a 2% increase in adjusted net income. Not bad, Delta, not bad at all.
So, it seems that Delta is betting on travelers to keep paying more to fly this holiday season, especially those with deeper pockets who are willing to splurge on premium seats. CEO Ed Bastian said in an interview on CNBC that the demand to fly remains strong, despite the sharply higher fares. He even said that the households in the top 40% in terms of income are basically their customers, and their priority is to travel. Well, bless their hearts, I guess they can afford it.
Now, I know what you’re thinking: how can airlines just pass on higher costs to customers? Well, it seems that when fuel prices rise, airlines tend to cut their planned schedules and eliminate flights that were barely profitable anyway. But if demand remains strong, they can get away with raising fares. And that’s exactly what’s happening here. Delta’s available seats during the summer travel quarter were essentially unchanged from last year, which led to 86% of available seats being full throughout the quarter. No wonder fares are going up.
Experts in the field agree that they’re seeing strong demand to travel and higher fares through the rest of this year. In fact, Hayley Berg, lead economist at travel site Hopper, said that passengers are booking holiday travel earlier this year than in past years, and they’re paying more to do so. Thanksgiving flights are already averaging $400 a ticket, up 31% year over year, and Christmas flights are about $450, up 23% year over year. Yikes, that’s a lot of money.
Earlier this year, when jet fuel prices fell, Delta and other airlines didn’t lower their fares. And now, with fuel prices climbing back up, CEO Bastian expects higher fuel costs to remain through the fourth quarter. No surprise there. Delta’s earnings were slightly below Wall Street forecasts, and they lowered their guidance for the rest of the year. Shares of Delta and other US airlines fell slightly in premarket trading, but I’m sure they’ll bounce back.
In conclusion, it seems that Delta is doing just fine, despite the higher fuel costs. And if you’re planning to fly this holiday season, be prepared to pay more. But hey, at least you’ll be flying in style, right? As I always say, you can’t make this stuff up. Somewhere in Atlanta, a producer thought this sounded terrifying, but I just think it’s the cost of doing business. Anyway, that’s the story of Delta’s latest earnings report. Now, if you’ll excuse me, I need to refill my coffee cup. 🚀
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
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