Expert suggests booking flights with points amid rising jet fuel costs, possible fare hikes for summer
Oil prices have soared over the last week amid war in the Middle East, which could mean more expensive fuel costs for airlines and ultimately potentially higher airfare prices for customers heading into the high-demand summer months.
On Monday, oil prices rose above $100 a barrel for the first time since Russia invaded Ukraine in 2022, according to the Associated Press, and with jet fuel as the second biggest expense for airlines behind labor, experts have warned that travelers could ultimately feel the economic ripple effect on airfare.
With Iran effectively blocking the Strait of Hormuz, a vital passage through which 20% of the world's oil flows, oil can't get through, and there's currently nowhere to store supplies. This has prompted major producers to cut oil output.
United Airlines CEO Scott Kirby recently warned that the giant jump in jet fuel costs could have a "meaningful" impact on airline finances, raising ticket prices, saying those increases could "probably start quick," CNBC reported.
Travel expert Julian Kheel, who has been in the travel industry for 15 years and has consulted with U.S. airlines, explained to ABC News how major carriers are exposed to the geopolitical events and what that means for pricing and planning.
"In the past, airlines used fuel hedges in order to maintain a consistent price of fuel. However, in the last decade, most of them have moved away from that because they ended up suffering financial losses as a result," he said. "That means when the price of jet fuel goes up, it's felt almost immediately by passengers looking at airfares."
Kheel noted that "oil prices can fluctuate rapidly."
"Just because they're over $100 today doesn't mean they'll be over $100 two weeks from now," he said. "They can drop just as quickly as they go up depending on what's going on in the world. So don't expect that today's airfares are necessarily going to be tomorrow's airfare."
Keel said the best thing travelers can do for the time being, particularly if they're looking to book a flight imminently, is to "book an airfare that can be easily changed or refunded without a penalty."
"Given the uncertainty with global political conflicts right now and not knowing if the price will continue to go up or later drop, the best way through is to lock in a price today, but then continue to monitor airfares," he suggested. "If the price drops, cancel and rebook at the lower price."
In addition to booking flights that can be changed, Kheel said "using points right now could be a great way to both protect yourself against high cash airfares and also leave the possibility open to get a better deal in the future."
"Nowadays, points airfares tend to move up the same way cash airfares do: When there's more demand, you'll spend more points," Kheel said. "Almost all U.S. airlines allow you to cancel tickets you've booked with points without paying a penalty on all but the basic economy fares."
