United CEO: Airfare likely to rise as jet fuel prices surge

United Airlines CEO Scott Kirby warned this week that soaring jet fuel prices tied to conflict in the Middle East could soon push airline ticket prices higher.

Kirby, following an event at Harvard University, noted that while the demand for air travel was still strong, the carrier would likely feel a “meaningful” impact on its second-quarter finances due to the recent spike in fuel prices as the Trump administration continues its military operation in Iran.

The impact would “probably start quick,” Kirby said after being asked when higher fuel costs would likely start affecting airfare prices, according to CNBC.

Jet fuel accounts for 25 to 30 percent of an airline’s operating expenses, making it the second biggest expense for a carrier after labor, according to the International Air Transport Association.

The Argus U.S. Jet Fuel Index showed a price of $3.88 per gallon as of Friday, a roughly 55 percent increase from before the U.S. and Israel launched joint airstrikes against Tehran last week.

Oil and gas prices have climbed steadily over the past week, intensifying fears of prolonged supply disruptions and inflationary pressures on the global market.

The Strait of Hormuz, a narrow channel between the Persian Gulf and the Gulf of Oman where about a fifth of the world’s oil supply passes through daily, has been effectively closed to shipping traffic for days as part of Iran’s retaliatory campaign.  

Qatar’s energy minister has also reportedly warned that exports through the Gulf could come to a halt “within weeks,” a move he predicted could push oil prices as high as $150 per barrel.

The price of Brent crude oil, the international standard, rose 8.52 percent this week, reaching $92.69 per barrel as of Friday afternoon.

The Trump administration has taken steps in recent days to try to contain the fallout, including easing some sanctions on the purchase of Russian oil.

Kirby’s comments, meanwhile, underscore an already fraught commercial travel situation, as airspace closures across the Middle East have led to thousands of flight cancellations, leaving many passengers stranded.  

Secretary of State Marco Rubio told reporters on Tuesday that the State Department was working on a “variety of methods” to rescue stranded Americans, including private charter flights, military transports and in some cases, land routes to neighboring countries.

Nearly 24,000 American citizens have safely returned to the U.S. since the military operation began on Feb. 28, according to the State Department.