ALL NEWS

Airlines will raise fares this summer. Here’s why

Apr 17, 2019, 6:50 AM | Updated: 8:41 am
Utah firearms...
File photo: Salt Lake City International Airport (Photo credit: Peter Samore)
(Photo credit: Peter Samore)

(CNN) — Airfares are almost certain to go up this summer. Troubles with the Boeing 737 Max are part of the reason.

The grounding of the Boeing 737 Max jet took 371 planes out of service worldwide for an indefinite period of time. Boeing also halted deliveries of new jets that could have been in service by the time the peak summer season arrived. Discount European carrier Ryanair had been awaiting its first 737 Max when deliveries were halted.

Among 737 Max’s largest customers are discount airlines, like Southwest in the United States and Norwegian Air in Europe. Those carriers put pressure on fares, forcing other airlines to offer more seats at lower prices to compete for leisure travelers. Fewer flights by discount carriers mean less competition for other carriers, and less incentive to offer lower-priced seats on their planes.

“I think it certainly has the ability to pressure fares higher as we get into the busy summer months,” said Helane Becker, airline analyst for Cowen.

Uncertainty over when the Boeing 737 Max will be back in service has led airlines to cancel hundreds of flights a day all the way into August. Southwest canceled flights through August late last week, and American Airlines, the world’s largest carrier, did the same on Sunday. United Airlines, the third US airline with a version of the 737 Max in its fleet, has canceled flights through early July.

United on Tuesday trimmed its estimate for how much its capacity will grow this year. It expects to grow by up to 5% growth, down from its earlier forecast of 6%. It also said it expects sales from passenger fares to be up 2.5% in the April through June period.

Summer is the peak travel season for airlines. They put as many planes in service as they can, which means fewer extra planes will be available to fill in for the missing 737 Max jets.

“All the airlines have some extra planes at any period of time. But in the summer the system is strained more tightly,” said Philip Baggaley, the lead credit analyst for transportation companies for Standard & Poor’s.

The 737 Max problems aren’t the only reason airfares will be higher this summer. A strong US economy, with near record low unemployment has increased demand for travel. And higher jet fuel prices limit routes that airlines are willing to fly.

“It’s tough to disentangle the impact of the 737 Max from the other factors,” said Baggaley.

When jet fuel is lower, airlines will add flights on routes where they might not otherwise be profitable, which adds to passenger choices and can push down fares. The opposite happens when fuel prices are higher. Fuel prices are about 20% above where they were a year ago, and prices are expected to climb higher in the next three months.

Europe doesn’t have as strong an economy as the United States, but a number of budget airlines have gone out of business in the last six months, including Wow Air, Primera Air and FlyBMI. That means less fare competition, allowing airfares at other carriers to rise.

All of Boeing’s Max planes were grounded worldwide last month after a 737 Max jet flown by Ethiopian Airlines pilots crashed in that country, killing everyone aboard. It was the second fatal crash involving a Max in recent months. A Lion Air flight crashed in October.

Investigators believe the crashes are tied to an automatic safety feature of the new jet that forced its nose down.

It’s unclear when Boeing will get approval for a software fix meant to address the problem.

The-CNN-Wire
™ & © 2019 Cable News Network, Inc., a Time Warner Company. All rights reserved.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Today’s Top Stories

All News

House Bill...
HUGO RIKARD-BELL

Bill permitting pregnant people to use HOV lane passes House

A bill allowing pregnant women to use the HOV lane has passed the House. The bill now moves to the Senate for consideration.
9 hours ago
KAHRAMANMARAS, TURKIYE - FEBRUARY 6: A view of the destroyed building after 7.4 magnitude earthquak...
Rhea Mogul, Gul Tuysuz, Isil Sariyuce, Kareem El Damanhoury and Rob Picheta, CNN

More than 1,500 dead as powerful quake hits southern Turkey and Syria

One of the strongest earthquakes to hit the region in a century shook residents from their beds at around 4 a.m. on Monday, sending tremors as far away as Lebanon and Israel.
9 hours ago
This photo taken with a drone shows portions of a Norfolk and Southern freight train that derailed ...
Hannah Sarisohn, CNN

Evacuations ordered amid fears of an explosion as an Ohio train continues burning days after derailment

Residents near the site of a train derailment that sparked a massive fire in East Palestine, Ohio, were urged to evacuate immediately Sunday night.
9 hours ago
GOSHEN, CA - JANUARY 16: Tulare County Sheriff crime unit investigates the scene where six people, ...
Cheri Mossburg, CNN

2 arrested in central California shooting that left 6 dead, including mother clutching 10-month-old son

Originally Published: 03 FEB 23 16:30 ET Updated: 05 FEB 23 22:44 ET     (CNN) — Two suspects were taken into custody, one after a shootout, in a “cartel-style” massacre last month that left six people dead in central California, including a young mother and her 10-month-old son, authorities announced Friday. The suspects, identified in charging […]
9 hours ago
A woman wearing white sitting in front of a light box...
Michelle Lee

Winter blues: light therapy and lifestyle changes can help

SALT LAKE CITY – With the chilly weather and the shorter days, many people are prone to experience the winter blues. In the latest Let’s Get Moving with Maria podcast episode, host Maria Shilaos spoke with Dr. Jason Hunziker from the Huntsman Mental Health Institute about ways people can overcome the winter blues. Seasonal depression […]
1 day ago
little cottonwood canyon pictured, avalanche risk there is high...
Devin Oldroyd

Backcountry skier dead after fatal fall in Little Cottonwood Canyon

A backcountry skier is dead after "tumbling a significant distance," according to the Unified Police Department. The incident occurred near Lisa Falls.
1 day ago

Sponsored Articles

Banner with Cervical Cancer Awareness Realistic Ribbon...
Intermountain Health

Five Common Causes of Cervical Cancer – and What You Can Do to Lower Your Risk

January is National Cervical Cancer Awareness month and cancer experts at Intermountain Health are working to educate women about cervical cancer, the tests that can warn women about potential cancer, and the importance of vaccination.
Kid holding a cisco fish at winterfest...
Bear Lake Convention and Visitors Bureau

Get Ready for Fun at the 2023 Bear Lake Monster Winterfest

The Bear Lake Monster Winterfest is an annual weekend event jam-packed full of fun activities the whole family can enjoy. This year the event will be held from January 27-29 at the Utah Bear Lake State Park Marina and Sunrise Resort and Event Center in Garden City, Utah. 
happy friends with sparklers at christmas dinner...
Macey's

15 Easy Christmas Dinner Ideas

We’ve scoured the web for you and narrowed down a few of our favorite Christmas dinner ideas to make your planning easy. Choose from the dishes we’ve highlighted to plan your meal or start brainstorming your own meal plan a couple of weeks before to make sure you have time to shop and prepare.
Spicy Homemade Loaded Taters Tots...
Macey's

5 Game Day Snacks for the Whole Family (with recipes!)

Try these game day snacks to make watching football at home with your family feel like a special occasion. 
Happy joyful smiling casual satisfied woman learning and communicates in sign language online using...
Sorenson

The Best Tools for Deaf and Hard-of-Hearing Workplace Success

Here are some of the best resources to make your workplace work better for Deaf and hard-of-hearing employees.
Team supporters celebrating at a tailgate party...
Macey's

8 Delicious Tailgate Foods That Require Zero Prep Work

In a hurry? These 8 tailgate foods take zero prep work, so you can fuel up and get back to what matters most: getting hyped for your favorite
Airlines will raise fares this summer. Here’s why