U.S. airlines favor higher fares over fuller planes as fuel costs squeeze profits

U.S. airlines are increasingly willing to fly with empty seats rather than slash fares simply to fill ​them, betting that disciplined pricing and flight schedules will help protect profits at a time of soaring fuel costs.

The strategy has delivered substantial revenue gains as demand has ‌held up despite sharp fare increases. Yet profits have still been squeezed as jet fuel prices surged roughly 90% since the US-Israeli war on Iran began in February, forcing several major carriers to cut earnings forecasts.

Executives at Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group have emphasized protecting margins over boosting passenger volumes.

Their resolve faces a test in 2027. Industry schedules point to more flying capacity, potentially intensifying competition for passengers even as fuel ​prices are expected to stay high and making this year’s substantial fare gains harder to repeat.

“If fuel stays elevated, we have to continue to push yield up so that ​we can make a bit of money,” American Chief Financial Officer Devon May told Reuters on Thursday. Yield is the revenue airlines collect for each ⁠mile passengers fly.

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Original source: https://www.nbcnews.com/business