Due to the Russian invasion of Ukraine, regular-grade gas prices have reached an all-time high of $4.17, which is a massive $0.55 surge from only a week ago, according to the American Automobile Association.
As a result, many Americans are feeling the pain of sticker shock at the pump. But there appears to be another nasty surprise waiting to pounce—and they will come in the form of fast-rising airline fares.
According to KTLA in Los Angeles, the cost of jet fuel is already up approximately 50 percent so far this year—the highest seen in more than thirteen years—and many analysts are predicting that airlines will eventually pass on these higher costs to passengers.
Fuel costs are generally airlines’ second-biggest expense, only behind labor. “The higher fuel will more than wipe out better revenue near-term resulting in modest reductions to (quarterly) estimates,” MKM Partners airline analyst Conor Cunningham said in a note to clients.
According to CNBC, it could take several months before travelers can directly feel the higher fuel price in their airline tickets, according to Cowen & Co. airline analyst Helane Becker. “As a result, it is likely the next few months will be financially concerning, even though traffic is strong,” she said in a note.
Already Feeling Price Increase
However, WSB-TV in Atlanta has reported that some travelers are already seeing higher prices—just in time for the beginning of spring break. “I would say the same flight is about $100 more. And if you are trying to fly out the same day, you can just forget it,” traveler Jermel Howard told the news outlet. Another traveler Angela Davidson noted that “more people are still going to travel … but it is hurting the pocket. It is hurting us very bad.”
According to Reuters, domestic flight schedules in the United States had been on track this spring to surpass levels seen in 2019. But the higher fuel and ticket costs are now expected to slow down that strong momentum. “Airlines will be pushed again on credit limits and again see suppliers less willing to give unsecured terms,” a senior London-based trade source told the news agency. “We may see some further casualties post-COVID now, just when recovery looked more positive.”
Surging Nickel Price
Russia’s invasion of Ukraine is significantly affecting the prices of other important commodities as well. A prime example is the fast-rising price of nickel, which is one of Russia’s key global exports. CNBC has reported that the London Metal Exchange suspended nickel trading on Tuesday after three-month contract prices more than doubled to more than $100,000 per ton. The previous all-time high was $51,800 per ton set in 2007.
Nickel is known to be a critical ingredient in the lithium-ion battery cells that are used in most electric vehicles.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.