Don’t Fly To Buffalo Or LA

JetBlue (NASDAQ: JBLU) has a section of its website that reads, “If you are traveling to or from one of these areas, you may choose to rebook your flight into a nearby airport.” The list is daily long. It includes 35 airports in cities that range from Buffalo to Tampa to New York to LA,

It is not that the list is terribly interesting. It is that it exists at all. Carriers say they are cutting back routes (or eliminating them) to cities that don’t generate much traffic. But some of America’s largest cities are on the list. The US has a jet fuel supply catastrophe; it can raise fares on the routes it maintains to keep margins reasonable, but the problem is broader than jet fuel P&L.

Therefore, the  P&L problem can’t be avoided. Jet fuel prices have risen. They are up as much as 82% since the start of the war in Iran. There is a rumor that creditors and the US government did not bail out Spirit Airlines because the cost of fuel made it financially impossible to revive the carrier.

It is almost certain that carriers cannot raise rates enough to offset an 82% increase in fuel. Sharply higher ticket prices will kill demand. Carriers can’t lose money on most of their flights and make it up in volume.

The US has not hit the panic button the way they have in Asia and Europe. According to the AP, ‘Europe has “maybe six weeks or so” of remaining jet fuel supplies, the head of the International Energy Agency said Thursday in a wide-ranging interview, warning of possible flight cancellations “soon” if oil supplies remain blocked by the Iran war.’ It is unimaginable, and what do the carriers there do then? People will be traveling long distances on bicycles.