Airlines are cutting cheaper flights amid latest jet fuel spike

By Chris Isidore, CNN

(CNN) — Airlines are cutting more flights this year in response to high fuel prices.

Executives from United, American and Southwest Airlines said during an investors conference Wednesday they expect to eliminate cheaper, less profitable flights from their schedule in the final months of the year.

“If fuel is higher-for-longer, I think that’s a natural response… that you trim some of that capacity off,” Southwest CFO Tom Doxey said.

Airlines already trimmed flights from their summer schedules and raised baggage fees in response to higher fuel costs. United CFO Michael Leskinen said Wednesday that airlines aren’t seeing signs that demand is weakening, even with higher fares and fees.

Airfares in June, July and August were about 25% higher compared to a year ago, according to the Consumer Price Index, which is the government’s key inflation measure.

United, American and Southwest didn’t identify which specific flights would be trimmed later this year. However, experts say the ones most likely to be cut are the cheaper, less popular flights.

“There are some routes that were on the lower end (of profitability), they get pushed into not profitable when fuel spikes like this,” said Leskinen.

Those tend to be flights preferred by bargain hunters, not business travelers, said Zach Griff, author of an airline newsletter, From the Tray Table. That includes less traveled flights at less popular times, such as Tuesday or Saturdays, or very late night or early morning.

Adding to the pressure on fares this year is the exit of discount carrier Spirit Airlines, which halted operations in May following the first fuel surge. Meanwhile other budget carriers, like Frontier, are trying to shift towards premium offerings.

That means there are fewer options available for the budget travelers, Griff said.

“This is an environment that is really challenging for the low-end customer who are trying to find low priced airfares,” he told CNN. “The cheap fares are going away, and the fares are increasing too.”

Airlines have been paying billions more for fuel this year as the Iran war drags on. The nation’s four largest airlines – United, Delta, American and Southwest – together paid nearly 80% more for fuel from April to June than they did a year earlier.

The average price for a gallon of jet fuel rose to $4.56 a gallon Thursday, according to Argus Research. That’s the highest it’s been since early May, although still below its April peak.

But airfares aren’t entirely dependent on the cost of fuel.

“Airfares are a function of supply and demand,” Delta CEO Ed Bastian when asked by CNBC in July why the company didn’t lower fares when jet fuel prices came down from an earlier peak.

“The demand set is really strong.”

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