Airline CEOs urged by lawmaker to lower fares if fuel prices come down

A U.S. lawmaker is urging the CEOs of the nation’s largest airlines to cut prices if the cost of jet fuel drops after a big increase this year, prompting carriers to increase surcharges, baggage fees and ticket fees.

“If airline pricing is truly tied to global fuel costs, it should be truly responsive when those costs drop,” U.S. Rep. Ritchie Torres, D-N.Y., wrote to CEOs. Delta Airlines, United Airlines, JetBlue Airlines And Southwest AirlinesAccording to a letter seen by CNBC. “I urge you to commit to lowering the costs associated with air travel if jet fuel prices fall. The American people deserve fairness and pricing models that reflect not only market conditions but also economic justice.”

Fuel is airlines’ biggest expense after labor. Jet fuel averaged $4.88 per gallon in New York, Houston, Chicago and Los Angeles on April 2, according to Argus. This figure has increased by nearly 95% since the start of the US and Israeli attacks on Iran on February 28. The climb has been steeper in other regions that do not produce as much oil or jet fuel as the United States.

United declined to comment. Other operators did not immediately respond to requests for comment.

Delta reported a $2 billion fuel writedown this quarter and said it would “meaningfully” scale back capacity plans; It’s something other carriers will likely discuss when they report results next week.

Lower capacity could increase fares, especially if demand remains strong. Meanwhile, a drop in fuel prices could do the opposite of pricing, encouraging airlines to increase capacity.

Asked last week what would happen if fuel prices fall from their recent highs, Delta CEO Ed Bastian said “recapturing fuel is going to be important. Whatever we do and the extent to which we can maintain the pricing power that we’ve talked about from industry rationalization, that will certainly help us increase our margins this year and clearly next year.”

Delta, United, Southwest, JetBlue, American Airlines And Alaska Airlines Baggage fees have increased since the attacks began, while airlines around the world have also announced higher airfares and surcharges.

Consumers willing to spend more to travel are driving the airline industry. Bastian told analysts last week that demand is rising.

“I think the high-end consumer, the premium consumer, is genuinely immune to headlines, or becoming more immune, and not delaying their investment in the experience economy, waiting to see what the next headline is at the margin,” he said.