Airlines with younger fleet and bigger fuel hedges are more likely to survive the challenge posed by rising fuel prices. Also, airlines with higher proportion of point to point service should do better than the ones with hub and spoke system.
With the average price of jet fuel up nearly 30% year over year, airlines say they’re keeping all cost-cutting options on the table, including reductions in seat capacity.
During conference calls with analysts over the past week, three carriers — US Airways, Delta and American — have indicated that if fuel prices continue to climb, they will consider capacity cuts to eliminate less profitable routes and raise airfare. Airlines are also considering higher fuel surcharges.