US airlines likely to recover surge in fuel costs from customers

Bloomberg

US airlines will likely recover a surge in fuel costs from customers amid a robust desire for travel, according to the president of Sun Country Airlines Holdings Inc.
The industry “takes time” to pass along pricier fuel into higher airfares but will do so in the coming months by reducing the amount of flying available, Dave Davis said.
“The demand environment is incredibly strong,” he said at a Raymond James Financial conference. “Our demand is way up versus pre-Covid, 2019.”
Barry Biffle, the chief executive officer of Frontier Airlines Holdings Inc, echoed those comments. “You have spring break yields that you haven’t seen in years and summer yields look great, so we’re excited to see what happens,” he said at the conference.
Alaska Air Group Inc and Allegiant Travel Co said that they would start paring some flights from their schedules. Reducing the supply of tickets could let airlines raise ticket prices to recover the jump in fuel costs from the war in Ukraine.
Despite a surge of more than 50% in spot jet-fuel prices this year, Sun Country expects its unit cost to continue dropping as the airline flies more each day. The company sees costs below the 2019 level of 6.31 cents a seat mile by year-end, from 6.44 cents in 2021, Davis said.
Further fuel-price increases could affect that outlook.
Sun Country has three dozen Boeing Co 737 narrow-body jets plus 12 cargo aircraft it flies for Amazon.com Inc. The carrier plans have to 74 passenger 737s by the end of 2025, as well as additional cargo jets for Amazon.
A sizable charter operation and its business with Amazon mean Minneapolis-based Sun Country can charge customers directly for much of its fuel purchases. “We have no fuel exposure on a third of our revenue,” Davis said.
Sun Country rose 9.6% to $23.97 at 12:32 pm in New York as the broader market rebounded from a four-day slump. Frontier gained 4.1%
to $10.37.