United Airlines CEO Scott Kirby has issued a dire warning that some airlines "will not survive" if current issues persist, as jet fuel prices have more than doubled in just three weeks. This sharp increase is attributed to the ongoing war with Iran, which has caused significant market volatility and forecasts suggesting oil prices could reach $175 per barrel.
Financial Strain on the Aviation Industry
Kirby highlighted that if fuel prices remain at their elevated levels, it would result in an additional $11 billion in annual expenses for the industry. This figure starkly exceeds United Airlines' best-ever profit year, which was under $5 billion, underscoring the severe financial pressure carriers are facing.
Budget Airlines at Greatest Risk
Alan Fyall, an associate dean at the University of Central Florida's Rosen College of Hospitality Management, told The Los Angeles Times that budget airlines are particularly vulnerable. He noted that these carriers are "less resilient" due to their thin profit margins, making them more susceptible to failure in the face of rising costs.
Travelers are advised to book flights soon, as ticket prices are expected to increase by up to 20 percent to offset the soaring fuel expenses. This surge could significantly impact travel plans and affordability for consumers worldwide.
Additional Industry Challenges
Separately, the recent Department of Homeland Security shutdown caused significant disruption and billions in losses for the air travel industry. Although President Donald Trump signed an executive order to resume paying TSA agents, the incident added to the sector's ongoing struggles.
Experts warn that without a rapid decrease in oil prices, major US airlines, especially budget carriers, could face insurmountable challenges, potentially leading to failures and reduced competition in the market.
