Monday, July 22, 2024
29 C
Brunei Town

Delta hikes Q2 revenue outlook on sharply higher airfares

AP – To hear it from Delta Air Lines, happy days are here again, with travellers gladly paying sharply higher fares just to get on an airplane and go somewhere this summer.

Delta said on Wednesday that it expects second-quarter (Q2) revenue will be back to pre-pandemic 2019 levels, even with fewer flights. The airline said revenue per seat should be up to eight percentage points better than it originally expected.

However, the Atlanta-based airline is facing surging prices for jet fuel. Other expenses are spiking too.

Delta expects non-fuel costs to soar up to 22 per cent above 2019 levels on a per-seat basis, more severe than a mid-April forecast of 17 per cent.

With the mixed outlook, Delta shares closed down five per cent, and other airlines stocks also fell more than the broader market.

Heading into summer, travelers are paying more for any type of seat, from basic to premium, Delta CEO Ed Bastian said during an investor conference.

“We expect pricing this summer to be up probably somewhere between 25 per cent and 30 per cent on average,” Bastian said. “We’ve never seen anything of that scale.”

It’s not hard to find people on social media complaining about high fares, but airline executives scoff at the notion that the current prices could scare away customers.Speaking later at the same investor event, United Airlines CEO Scott Kirby said fares are only back to where they were in 2014, after adjusting for inflation.

Besides, he said, travel demand has proven to be unaffected by price. “It you’re worried about pricing destroying demand, you are betting against history,” Kirby.

The surprisingly strong rebound in air travel this year has allowed airlines to push fares higher but also left them struggling to handle the crowds with fewer workers than they had before the pandemic.

Staffing issues contributed to widespread cancellations and delays over the Memorial Day
holiday period.

Delta scuffled more than any other big United States (US) airline, cancelling more than 800 cancelled flights during a five-day span.

The union representing Delta’s pilots blamed understaffing.