If you’re a frequent airline customer, you might brace for higher flying costs.
It’s the claim of American Airlines CEO Doug Parker who says rising fuel costs are eating into airline profits.
“If indeed this is where fuel prices are going to stay, I would expect you would see higher fares to consumers over time,” Parker said in a recent call with analysts and reporters.
He pointed out fuel is the second biggest expense after labor for airlines and at American, the price was up 40 cents a gallon from one year ago, according to a report in the Tulsa World.
The increase was also blamed by American for a 45 percent drop in first quarter profit to $186 million. Rising fuel costs have forced American to replace many of its older planes which guzzle fuel far faster than the more modern planes. But fuel spending still went up 26 percent.
American Airlines paid an average of $2.10 a gallon for fuel compared to $1.70 a year ago. And it burned more than 1 billion gallons of fuel in the first quarter of this year.
And prices are still going up even since the end of March.