Airlines warn about spike in fuel costs, Southwest narrows revenue outlook


A bird flies by in the foreground as a Southwest Airlines jet comes in for a landing at McCarran International Airport on May 25, 2020 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Major U.S. airlines warned about a spike in jet-fuel prices, adding to costs during the busy summer travel season.

Jet-fuel in Chicago, Houston, Los Angeles, and New York averaged $3.18 a gallon on Tuesday after the Labor Day holiday weekend, up more than 30% compared with July 5, according to industry group Airlines for America.

Fuel and labor are airlines’ biggest costs. The spike in fuel prices raises the question of how much the carriers were able to pass on to their customers after the fall in fares from last summer. In the three-month period ending September 30, the Dallas-based carrier predicted unit revenue would fall between 5% and 7% compared to last year. In July, Southwest said revenue could drop as little as 3% this quarter from last year. “While August 2023 close-in leisure bookings were on the lower-end of the Company’s expectations, modestly impacted by seasonal trends, overall leisure demand and yields continue to remain healthy,” the carrier said in a securities filing.

Southwest said that it expects fuel to average $2.70 to $2.80 a gallon this quarter, up from its earlier estimate of up $2.55 to $2.65. It maintained its forecast for capacity to rise 12% from 2022.Other carriers warned increased costs could affect their results.Alaska Airlines

said higher fuel prices will eat into its pretax margin this quarter.

United Airlines

maintained its revenue forecast, but said it expects fuel prices of as much as $3.05 for the quarter, up from its July estimate of no more than $2.80 a gallon.

Airlines are scheduled to report quarterly results in October.