Jet Fuel Near Record Highs Pushes Thanksgiving Airfares Up About 30%

Anyone planning to fly this holiday season should expect to pay more than last year. Experts say airfares will be the highest in years as airlines scramble to cover the rising cost of jet fuel, one of their biggest expenses, NPR reported Friday.

The average price of jet fuel in the U.S. topped $4.75 a gallon this week, according to the tracking firm Argus. That is close to an all-time high and almost twice what it was a year ago. "Airfares right now are at what we see as a 10-year high because of the high cost of jet fuel," said Hayley Berg, lead economist at the travel tech company Hopper. "Airlines have to pass on these super high jet fuel prices in the form of higher fares to consumers."

Berg said Thanksgiving fares are up about 30% from last year, and tickets for the Christmas holiday are up more than 20%. So far, she said, travelers seem willing to pay, at least for big holiday trips. "We're at the time of year where travel is really sticky," Berg said. "Even with higher prices, travelers are unlikely to make major changes to their traditional holiday trips."

Airlines say demand is holding. In an earnings call this month, Delta Air Lines CEO Ed Bastian said consumers have shown a "limited amount of resistance" and still view airfare as "reasonably affordable" after the increases. "I think that's a very good sign for the future," Bastian said.

Not everyone is paying. At Baltimore/Washington International Airport, Rachel Stern of Frederick, Maryland, said she will drive to Chicago, where she grew up. "For me and my kids, just too much to get tickets," she said. Herb and Latasha Williams flew in from Dallas for a short birthday trip and found their tickets cost hundreds of dollars more than expected. Latasha Williams, who had hoped to go somewhere warm for the holidays, said she is now doubtful they can afford it. "Maybe next year. Maybe," she said.

Others are resigned. Mary Haller of Bethany Beach, Delaware, is planning a trip to Europe and said economy fares jumped in just two weeks. "It was significant and I sort of had shell shock," she said, but she has little choice but to buy.

The industry expects more pain. Michael O'Leary, CEO of the European low-cost carrier Ryanair, said this week in Belgium that fares in Europe could rise 10%, 15% or even 20% next year. "You're going to see the biggest increase in airfares, I would say, in history in Europe in the next 12 months," he said. The U.S. picture may be slightly better because the country has more oil-producing and refining capacity than Europe, but carriers are still hurting. Chris Sununu, head of the trade group Airlines For America, told CNBC that "the airlines themselves are eating most of that cost," and that the rest must be passed on, which is why "you see that 20 to 30 percent increase as we go into the holidays."

Travelers are adjusting how they shop. Berg said consumers are comparing more options and booking earlier to lock in prices. Usually, she said, she urges people in mid-October to book by month's end because prices will not drop. This year many customers already did so in September.

The fuel spike traces back to the Iran war and the blockade of the Strait of Hormuz, which have driven oil prices up since February and have repeatedly strained jet fuel supplies in the U.S. and Europe.