Issue No. 855

No Trouble at the Pump — Yet

U.S. Airlines Take Oil Price Hikes in Stride

Pushing Back: Inside the Issue

A couple of decades ago, $100-per-barrel oil was a doomsday scenario for the airline industry. Today, American Airlines CEO Doug Parker is confident that the industry can make money with oil at or above that price. That's a good thing, because that's where oil has been since Russia invaded Ukraine. After surging in the immediate aftermath of the invasion, oil prices have fallen below the $100 threshold, although volatility remains.

U.S. airline executives at an industry conference last week weren't too bothered about the price of oil, despite predictions to the contrary. Some, like Alaska Airlines and Southwest Airlines, are hedged, which buys them time before they have to make capacity and pricing decisions. But even the majority of airlines that aren't hedged say they'll be fine. In fact, most airlines think they only need to raise fares modestly to recoup the higher fuel bills. This is good news for airlines. And good news for travelers. Summer demand is still expected to be torrid.

But the usual caveats apply. The pandemic continues to rage, with infection rates in parts of Asia higher than they have ever been since Covid-19 unleashed itself on the world. The Ukraine war may still cause a surge in energy prices, which would dent the world's economic recovery. Inflation is a worry. Supply chains face increasing disruption. The labor market, particularly for pilots and licensed maintenance technicians, is tight. And although most now think it won't, the Ukraine war could escalate.

All or some of these things could happen or get worse. But for now, airline executives are still casting their eyes toward the summer, and they like what they see.

The Airline Weekly Lounge Podcast

Russia’s invasion of Ukraine initially sent oil markets into a spiral. Prices may have come back down to earth, but oil remains volatile. Yet, U.S. airline executives aren’t terribly concerned. More pressing is how to hire enough pilots to operate flights. Edward “Ned” Russell and Madhu Unnikrishnan report on what they learned at a recent industry conference and discuss which airlines plan to add or trim capacity this summer. To listen to the 'Lounge archive, visit Airline Weekly online.

Weekly Skies

U.S. airline industry executives largely brushed off concerns that rising oil prices will put a dampener on their still-nascent recovery from the Covid-19 pandemic, confident in the resilience of summer demand to absorb higher fares.

Sky Money

Air Canada plans to pay cash for its deliveries of Boeing 737-8 and 787-9 aircraft over the "near term" in order to de-lever its balance sheet, Chief Financial Officer Amos Kazzaz said at a J.P. Morgan conference last week. However,…


Some of Russia's private airlines appear open to returning their Western-owned aircraft to lessors despite a new law that allows them to seize the planes.

Routes and Networks

WestJet appears to be taking a page out of Air Canada's sixth-freedom hub strategy. The Calgary-based carrier announced new nonstops from Toronto to Chicago O'Hare, Dublin, Edinburgh, and Glasgow — the latter three routes will be flown with Boeing 737-8…

State of the Unions

U.S. airline executives are in agreement that the industry faces a pilot shortage that will limit schedules this summer.

Landing Strip

The Terminal 2/3 Delta Sky Way in Los Angeles to the South Terminal Complex in Orlando are just a few of the multi-billion dollar expansion projects poised to open at airports across the U.S. in the coming months.