- A Delta executive said strong demand for
travel would allow the airline to hike fares in Q2. - He indicated Delta would raise fares by 7.5% to 10% each way.
Travel is back as the pandemic wanes and demand is so strong that
Delta executives indicated Tuesday that the company would lift fares in the second quarter, but appeared confident travelers would happily absorb the additional costs because of their pent-up desire to travel.
"We're seeing an increase in demand that is really unparalleled," Delta President Glen Hauenstein said at a JPMorgan investor conference Tuesday. As the omicron wave of the coronavirus recedes, Delta saw its busiest-ever day for bookings last week, Hauenstein said, without specifying which day it was.
Hauenstein said the robust demand would allow Delta to lift fares in the second quarter, by around $15 to $20 each way on a $200 ticket — equivalent to a hike of 7.5% to 10%.
In an interview with the Financial Times on Tuesday, Ed Bastian, Delta CEO, said higher fuel costs would "no question" lead to fare hikes across the board, adding that the airline would add a fuel surcharge to international flights as "market conditions permit."
Jet fuel prices ended last week about 80% higher from a year ago, according to the International Air Transport Association. Oil prices spiked after Russia invaded Ukraine.
Bastian echoed Hauenstein's optimism about travel at a conference in London on Tuesday, according to reporting from the event by Bloomberg.
"In the last three weeks the governments of the world have decided it's time to go, that the Covid era is over," Bastian said, per Bloomberg. "We're moving into a period where we're managing this virus, rather than being managed by it."
Russia's invasion of Ukraine isn't putting Americans off travel to Europe, Bastian said, per Bloomberg. "We saw a momentary little blip for about a week when the war started, but demand is strong."
Despite a surge in oil prices this year over the $100-a-barrel mark, Bastian said his airline remained wary of fuel-price hedging. Bastian told Bloomberg in 2016 that Delta lost $4 billion from the practice over eight years.
"We don't hedge," Bastian said Tuesday, per Bloomberg. "I've lost a lot of money doing it. I understand if you're a smaller carrier you've got to have more risk control. But long-term I don't think that it's necessarily healthy. We can sustain a fuel spike."