Airline officials are expecting a robust holiday travel season after a dynamic spring and summer that saw pent-up demand from the COVID-19 pandemic manifest itself in increased traffic.
But executives are also keeping a wary eye on the one thing that could hamper a full recovery for the industry - rising fuel prices.
Delta Air Lines had a muted celebration of a profitable third-quarter earnings announcement last week, mostly because of its fourth-quarter prediction that fuel prices would impact its bottom line.
Tracking fuel costs over the last year suggests that Delta, and all airlines, should be nervous.
According to the International Air Transport Association, jet fuel costs rose 3.7% worldwide last week, are up 17.8 percent from a month ago and are a whopping 118.7 percent higher than they were a year ago.
Fuel costs alone accounted for nearly 20 percent of Delta's adjusted operating expenses in the third quarter, according to Reuters News Service. The carrier said every 5 cent increase in fuel prices drives up its expenses by about $40 million.
In the last week, jet fuel prices have gone from $2.33 a gallon to $2.39.
In response, Delta CEO Ed Bastian suggested the airline might have to pass along the increased costs to consumers.
"There's nothing we can do to keep fuel prices down," he said in an interview with Reuters. "What we need to work on is our ability to include that in our pricing."
The news service noted one key element to that. Historically, the airline industry has been able to increase fares to offset higher fuel costs. But with air travel demand still way below pre-pandemic levels - capacity is still around 75-80 percent of what it was in 2019 - such moves carry risk.
At least one analyst remains optimistic, however. Citi analyst Stephen Trent told Reuters that the pace of demand recovery, especially on the transatlantic corridor, should ease Wall Street's concerns about the fuel cost pressure.
"Moving into 2022, continued revenue recovery seems more relevant than fretting about oil prices," he said.
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