Delta CEO Ed Bastian says airline fares will stay elevated even if jet fuel prices fall

Jet fuel spike keeps airfares high for busy summer travel season FOX Business correspondent Grady Trimble discusses the rising cost of jet fuel, which saw a 10% increase from Tuesday to Wednesday, raising concerns about elevated airfares for the summer travel season.

Delta Air Lines sees higher fares staying in place for consumers amid higher costs for fuel and other expenses, even if oil prices return to more moderate levels and allow jet fuel costs to decline in turn. Delta CEO Ed Bastian said on the company's quarterly earnings call that the dynamics of the airline industry have changed significantly as higher fuel prices, as well as increases in other categories of operational expenses, have made it more difficult for low-cost carriers to compete through lower airfares.

"Most U.S. carriers were already struggling to earn their cost of capital against a backdrop where industry airfares have meaningfully trailed inflation, costs have reset higher, and consumer preferences have evolved," Bastian said. "As we predicted, structural change has accelerated, enabling the industry to recapture this year's fuel cost inflation at the fastest pace of any recent cycle," he added.

Delta Air Lines CEO Ed Bastian said that he thinks higher airfares will remain for consumers as the industry adjusts to cost pressures.

Bastian said that Delta sees those shifts in the industry continuing to play out, which will allow airfares and the revenue outlook to remain steady even if energy prices return to their pre-Iran war levels.

"Even after recent fare increases, airfares remain 10 to 15 points below overall inflation since COVID," Bastian said, adding that much of the industry is still earning returns below the cost of capital.

"We believe that current revenue momentum should remain sustainable even if fuel prices...