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Is this the end of cheap flights?
Is this the end of cheap flights?
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Subtitles (43)
0:00
Fuel generally accounts for about 25 to
0:03
30% of operating costs for an airline.
0:06
If the price of fuel is impacted, so is
0:08
the airlines bottom line.
0:10
>> So that we're talking literally hundreds
0:12
of millions into the billions of dollars
0:13
collectively as as a US industry and
0:15
extra fuel.
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>> And you've probably noticed how airlines
0:18
have passed many of those costs on to
0:20
consumers.
0:21
>> They upped bag fees, which will not come
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back down, by the way. They are
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immediately upping fairs. They are
0:27
cutting routes that are now unprofitable
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because it's too expensive to run them
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with the higher fuel costs.
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>> CEO Scott Kirby says consumers should be
0:34
aware that ticket prices are rising and
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he warns the increase needs to be at
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least 20% to offset rising fuel costs
0:41
amid the war with Iran.
0:43
>> We are absorbing probably 50% of the
0:45
cost on our own and probably about 50%
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will go into pricing. For the big
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companies like Delta, United, and
0:52
American, despite revised profit
0:55
outlooks, business is still booming.
0:57
That's because they're much more
0:58
dependent on their premium offerings and
1:00
customers who are still reliably buying
1:03
expensive flights. If you look at the
1:05
profit per seat, many airlines make much
1:07
more money off business class and
1:09
particularly premium economy passengers.
1:12
>> Before the 1978 airline deregulation
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act, flying was firmly for the wealthy.
1:18
Since then, the introduction of lowcost
1:20
airlines has made travel cheaper and
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more accessible for many. But these
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smaller, more affordable carriers don't
1:28
have the same resources as big companies
1:30
for offsetting fuel costs.
