Swoop airline president says spiking fuel costs mean pricier fares

According to Swoop, the increase in jet fuel prices must be passed on to passengers.

Bob Cummings, who was appointed head of WestJet Group’s ultralow-cost subsidiary last Wednesday, has been named. saidInterviewer said that while budget airlines aim to reduce the impact of fuel and labour costs on airfares but that market forces cannot be ignored.

“We adjust almost in real-time to market forces that cause input costs to rise. They are essential for financial health of the company,” he said. saidMonday was his first day at work.

“We will do everything possible to reduce that and offer affordable fares.”

The International Air Transport Association reports that the price of jetfuel rose by 129% in response to Russia’s invasion and sanctions on oil imports. It was at US$153/barrel by April 8. The price of jet fuel has declined slightly in the past.

Cameron Doerksen from National Bank says that fuel costs are a significant headwind for airlines over the next quarters. saidLast week, we sent an investor note.

Cummings, who is joining Swoop after a three-and-a-half-year stint away from the company following 13 years as a WestJet executive, nonetheless expects bookings to surpass pre-pandemic levels this summer.

Other obstacles include the rapid expansion of domestic operations by Flair Airlines, rivals Lynx Air, and new entrant Lynx Air. There are also ongoing COVID-19 testing requirements.

Flair Airlines lost one aircraft in the past year. However, the Edmonton-based airline plans to add 20 Boeing 737s to its fleet by June.

According to its CEO, Calgary-based Lynx (formerly Enerjet) aims to operate 148 flights per week on more than a dozen routes within Canada by July.

Swoop will be serving 33 destinations this summer, approximately half of which are in Canada. Five new U.S. cities have been added to the list: New York City, Chicago, San Francisco and Los Angeles, as well as Nashville, Tenn. These routes will be flown by 16 narrow-body Boeing 737 jetliners, six of which are expected to arrive this summer.

Cummings: “With the pent up demand… We’re confident in filling those planes.” said.

Canadians are now more interested in traveling after being confined by COVID-19 for two years. But, larger bookings could stagnate if higher fuel prices are passed onto passengers. saidJohn Gradek, McGill University’s Aviation Management Program Head.

“Typically, airlines have imposed fuel surcharges on sales in the past because of these fluctuations. This is to try and recoup some increased fuel cost. And this of course gets passed along to the consumer.”

However, discount airlines may be more competitive and might consider other strategies, such as paying a portion of fuel cost.

“Which carriers, if any, are strong enough to handle that? Can they absorb the price?” Gradek asked. Gradek replied, “It will increase your cash burn, and it’ll impact your profitability.”

This report was published by The Canadian Press on April 18, 2022.