cnbc_topnews

Why flights are so expensive and will likely stay that way

📰 source: cnbc_topnews · 💼 business

airfare in the u.s. jumped 26.5% in june from a year earlier. airlines say demand is still strong even after hiking fares, and they expect to keep pricing power through at least the rest of the year.

examples abound: one traveler paid $800 for a new york-chicago economy ticket on united. southwest's average one-way fare hit $225.61 in q2, up from $186.65. united sees an extra $6 billion in fuel costs this year, american similar. labor, maintenance and airport fees are also up. carriers are trimming schedules, which cuts choices and supports fares. fuel prices remain high: gulf coast jet fuel is $3.60 a gallon, down from april's $4.78 but still up sharply since late february.

big airlines are gaining market share, partly because spirit airlines collapsed in may, removing seats. frontier and jetblue plan to grow, and frontier's average fare revenue rose to $63.04 from $40.94. however, summer demand may be cooling slightly: u.s. airport screenings are down 0.5% from last year through july 24, and one traveler said he'd draw the line at $400 for a round trip.

why it matters: airlines' pricing power from fuel costs is boosting margins, but waning demand could pressure second-half earnings.

source: cnbc_topnews
sentiment: -0.40 · impact: 0.40

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Surprise fall in US jobs last month as slow summer continues

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US strikes $1.2bn deal to pay German firm to halt offshore wind projects