Skift Take
If fuel prices rise considerably, airfares will need to increase as well, so this would be bad for consumers. But investors might cheer.
If U.S. airlines know what's good for them, they'll hope fuel prices go up, one prominent investment analyst said Thursday at an industry conference in New York.
The conventional wisdom is the opposite. A considerable chunk of an airline's cost is typically fuel, and if the prices fall, an airline that otherwise makes no changes almost immediately becomes more profitable. But over time, if fuel prices stay relatively low, as is the case today, airlines tend to use extra profits to expand into new markets and add routes and frequencies. Analysts sometimes fear that could lead to a supply-and-demand imbalance, with carriers dropping prices to fill unsold seats.
"These airline management teams come out and they say they don't want higher fuel prices," Hunter Keay, an analyst with Wolfe Research, said at Aviation Day USA, sponsored by the IATA, a trade group, an
