With jet fuel prices near a record, holiday airfares soar higher

BALTIMORE — Herb and Latasha Williams flew from Dallas to Baltimore/Washington International Airport this week for a quick vacation to celebrate his birthday.

But their plane tickets cost hundreds of dollars more than they expected. And Latasha Williams is now wondering if they can afford to travel for the holidays.

"I kind of wanted to go somewhere warm. Florida, I'm thinking," she said.

Then she looked at airfares.

"Maybe next year. Maybe," she said with a laugh. "Fingers crossed."

Those planning to fly this holiday season, should be prepared to pay more than they did last year. Experts expect airfares for this holiday travel season will be the highest in years as airlines scramble to cover the rising cost of jet fuel, which is one of their biggest expenses.

The average price of jet fuel in the U.S. topped $4.75 per gallon this week, according to the tracking firm Argus. That's close to an all-time high, and almost twice what it was a year ago.

"Airfares right now are at what we see as a 10-year high because of the high cost of jet fuel," said Hayley Berg, the lead economist at Hopper, a travel tech company. "Airlines have to pass on these super high jet fuel prices in the form of higher fares to consumers."

Airfares for Thanksgiving are up about 30% compared to last year, according to Berg. Tickets for the Christmas holiday are up more than 20%.

But so far, Berg said, travelers seem willing to pay, at least for their big holiday trips.

"We're at the time of year where travel is really sticky. Even with higher prices, travelers are unlikely to make major changes to their traditional holiday home for the holiday trips," Berg said in an interview with NPR.

U.S. airlines say demand is holding steady even as fares have gone up. In an earnings call this month, Delta Air Lines CEO Ed Bastian said consumers have put up a "limited amount of resistance" and still view airfare as "reasonably affordable" even after fare increases.

"I think that's a very good sign for the future," Bastian said.

Some in the industry think fares will go even higher next year.

"You could see airfares rise next year in Europe. I think by 10, 15, maybe 20 percent," Michael O'Leary, CEO of the European low-cost carrier Ryanair, said this week in Belgium. "You're going to see the biggest increase in airfares, I would say, in history in Europe in the next 12 months."

The picture may be slightly better in the U.S., which has more oil-producing and refining capacity than Europe. Still, higher fuel costs are hurting U.S. carriers, too.

"The airlines themselves are eating most of that cost," Chris Sununu, the head of Airlines For America, a trade group representing the big airlines, said in an interview this week with CNBC. "And some of it unfortunately has to be passed on to the customer and so you see that 20 to 30 percent increase as we go into the holidays."

Consumers are shopping around more in search of better deals, Berg said, and booking their tickets earlier to try to lock in reasonable prices.

"Usually I am shouting from the rooftops in the middle of October, 'Book your holiday travel by the end of this month, prices will not go down from here,'" Berg said. "But we actually saw an increase in customers booking holiday travel in September already."

At the airport in Baltimore, some travelers say they're priced out of flying for the holidays this year altogether.

"I'm gonna have to drive," said Rachel Stern of Frederick, Maryland. "I'm from Chicago originally, so I'm gonna drive. For me and my kids, just too much to get tickets."

But others said they're resigned to paying more for their holiday tickets. Mary Haller of Bethany Beach, Delaware is planning a trip to Europe.

"Literally I looked at the economy tickets two weeks ago and they have gone up," Haler said. "It was significant and I sort of had shell shock."

Still, Haller said she has little choice but to buy the tickets anyway.

"I feel bad for people who don't have the means to pay the extra money," she said.