A reader just asked me a question that I suspect a lot of travelers are wondering right now: “I am going back to Burlington, VT on May 15th for my granddaughter’s college graduation, flying out of LAX. American Airlines has the best flights that fit my schedule, but the price has increased about 30% in the last few days. I know the best time to book domestic flights is about 2–3 months in advance, which is what I’m trying to do. Should I wait another week or two to see if the price drops if crude oil prices come down, or should I just bite the bullet and book now?”
If you read my newsletter on Sunday, you already know my general advice lately: book flights sooner rather than later. And unfortunately, the news coming out of the airline industry this week suggests that prices could keep rising.
Let’s start with fuel, because that’s the biggest wildcard right now.
According to The Hill, United Airlines CEO Scott Kirby warned that rising jet fuel costs tied to the conflict in the Middle East could soon push ticket prices higher. Jet fuel is a huge expense for airlines — typically 25–30% of operating costs, making it their second-largest cost after labor. The Argus U.S. Jet Fuel Index recently showed prices at $3.88 per gallon, roughly 55% higher than before the U.S. and Israel launched strikes against Tehran.
Kirby said the financial impact on airlines will likely come quickly, telling reporters the effect would “probably start quick.”
The main reason is the disruption to global oil supply. The Strait of Hormuz — a narrow waterway where roughly one-fifth of the world’s oil supply passes each day — has been affected by the conflict. When that happens, global oil markets react immediately.
Airline industry analysts say that matters a lot for travelers.
A recent analysis by Skift estimated that the war could add $24 billion in jet fuel costs for U.S. airlines and ticket prices may need to rise at least 11% just to offset those costs. Globally, the additional expense could exceed $100 billion.
And we’re already starting to see airlines react.
According to Bloomberg, some Asian airlines have already raised fares on long-haul routes by around 15% and in Vietnam, officials warned airfares could rise as much as 70% because of the country’s reliance on imported jet fuel. One oil market analyst summed up the mood across the industry bluntly: “Panic buttons have been set off everywhere.”
Airlines are also considering cutting flights if fuel prices remain high. As aviation analyst Brett Snyder wrote on Cranky Flier, airlines only have two real levers when costs spike: “cut capacity and raise fares.”
In other words, fewer flights and higher ticket prices.
That doesn’t mean prices will rise forever or that they can’t drop occasionally. Demand still plays a huge role. Katy Nastro, a travel expert at airfare deals site Going, told USA Today that the current booking window for summer travel is actually right where travelers want to be.
“We’re right across what we call the Goldilocks Window for when to buy summer flights,” she said. For domestic trips, the sweet spot is about 3–7 months in advance, with three months being the latest you’d want to wait.
And here’s the key takeaway from her advice: “The best piece of advice for people worried about summer prices is to look and book now.”
Even if oil prices eventually fall, there’s no guarantee airfare will follow immediately. Airlines often keep prices high if demand remains strong.
So what would I tell my reader heading to Vermont for her granddaughter’s graduation?
If you’ve found flights that work for your schedule and the price is reasonable, I would book them now rather than gamble on prices dropping. I wouldn’t buy Basic Economy tickets that way if the price drops you can cancel, rebook and get a travel credit to use in the future. I would also set a fare alert (here’s how) so I track.
Graduation travel dates are fixed, demand is strong and right now there’s a major geopolitical event putting upward pressure on airline costs. Could prices drop? Sure. But based on what we’re seeing across the industry, the bigger risk right now is that they go higher.
