Like regular consumers at the pump, airlines refueling in Los Angeles are forced to adapt to higher prices at the pump.
Jet fuel prices have skyrocketed and experts say airfares are doing the same.
With the busy summer travel season approaching, airlines are beginning to pass costs on to passengers through higher fees and charges.
“Anytime there's an increase in oil prices, airlines end up passing it on to consumers immediately,” said Diego Bufquin, director of hospitality management and entrepreneurship at Tulane University. “It doesn't take long.”
Airlines have been struggling around the world since the United States and Israel began bombing Iran late last month. Flights have to take longer routes around war zones, and higher fuel costs eat into their already slim profit margins.
Jet fuel prices account for about a third of airlines' operating costs, so “they can't afford to wait to charge their customers more,” Bufquin said.
United Airlines CEO Scott Kirby told CNBC that rising fuel prices will have a “significant” impact on the airline's financial results.
Some non-U.S. airlines have already added fuel surcharges to their ticket rates. Air India last week announced a gradual increase in fuel surcharges on domestic and international routes. Hong Kong's flag carrier Cathay Pacific announced it will charge a surcharge on all fares to cover fuel costs starting Wednesday.
Airlines refueling at LAX and other regional airports are already being affected. Jet fuel prices in Los Angeles have increased more than 40% since the conflict in the Middle East began.
Like the price of gasoline for cars, jet fuel typically costs considerably more in California than in other states.
California is largely separated from the rest of the fuel distribution system. With limited pipeline connectivity, it relies more on ocean shipping from other states and countries. California also has higher taxes on jet fuel than many other states.
National average gas prices hit $3.71 per gallon on Tuesday, according to AAA. In California, the average on Tuesday was $5.52 per gallon.
Still, spring and summer demand is likely to remain strong even if prices rise, said Alan Fyall, associate dean of the Rosen College of Hospitality Management at the University of Central Florida.
“Rates are going up, but the demand is still there nationally,” Fyall said. “The only thing really holding back demand is the economic recession.”
In fact, consumers have been booking earlier than usual to secure lower prices for their summer travel, airlines said. Delta and American Airlines had some of their strongest single-day sales in March.
“When prices went up, we saw an increase in demand,” Alaska Airlines Inc. CEO Ben Minicucci said this week, according to Bloomberg. “I think people understood this initial: 'Wow, if this is going to get crazy, I better book my ticket now before the fares go up.'”
Airlines and other industries will face tougher conditions if fuel prices remain high for an extended period, he added.
Airfares were already rising, according to the Consumer Price Index, which found that the airfare index rose 1.4% in February compared to last year.
The impact will vary by airline, Fyall said. Many airlines hedge their fuel to negotiate a fixed price and stock up on fuel while it is less expensive.
“Airlines that manage their fuel purchasing process very well, that protect themselves very well, tend to be able to offset price charges quite well,” Fyall said.
Jet fuel prices are even more sensitive to economic forces than auto fuel prices, experts said.
It's not yet clear whether Californians will have to pay significantly higher airfares than their neighbors, but some flight routes within the state could temporarily become unavailable, according to Bufquin. As airlines look to save money, they could cut certain shorter, less profitable routes.
“Budget airlines like Spirit and flights from smaller California hubs like Burbank, San Jose and Fresno are at risk of being canceled,” Bufquin said.
