American Airlines CEO Says Higher Airfares Are Likely Coming
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Back in April, American Airlines CEO Doug Parker warned passengers that its airfares might rise in response to the heightened price of oil. We have yet to see prices change significantly, but on Monday, Parker made similar comments about more expensive plane tickets across the industry as oil prices continue to hover around $70 a barrel.
“If it becomes clear this is the new normal, you would see over time less capacity and growth in the industry and therefore higher prices,” Parker told reporters at the annual International Air Transport Association meeting on Monday. Over the past year, oil prices have gone up by about 50%, so it’s no surprise that American might try to offset their increased operational costs with higher fares.
Changes in pricing haven’t been noticeable since Parker’s previous warning of higher fares, and chances are they won’t skyrocket overnight. Parker himself expressed that he doesn’t foresee the price increase occurring “in the near term.”
Many airlines have seen the effects of increased oil prices on their bottom lines, and the tighter margins are starting to show overall in the industry’s profitability. So, it is very likely that American might not be the only carrier reacting to the price changes.
Featured image courtesy of Shutterstock.com.
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