Are you worried about airfare going up due to higher jet fuel prices? Folks, don’t worry about it… airfare is actually going to go down, and it’ll be cheaper than ever befores! Or at least that’s what we’re being told to believe.
In this post:
Transportation Secretary spins high oil prices as a positive
Second generation Fox News host Peter Doocy interviewed Transportation Secretary and former Fox News colleague Sean Duffy about the current situation that’s impacting the airline industry, in light of the conflict with Iran, the closure of the Strait of Hormuz, etc.
As many may remember, just a few days ago, President Trump assured us that Iran had agreed to never close the Strait of Hormuz again. Never, ever, ever, ever again! That was seen as a huge sign of relief for the airline industry. The only problem is that two days later, Iran once again closed the Strait of Hormuz.
It’s obviously an incredibly challenging time for the airline industry, since airlines just can’t afford for jet fuel prices to double (or more). The airline industry is low margin and highly competitive, and they also don’t have the ability to raise fares that much, given that pricing for airfare is elastic, and higher fares send down demand.
So that brings us to Doocy’s interview with Duffy, where Duffy claimed that we’re seeing a “small spike” in jet fuel, but somehow when this conflict is over, jet fuel prices will be even less than they were before the conflict, and consumers will also be paying less for airfare:
Doocy: “So let’s start here. The strait is closed, the strait is open, the strait is closed again. Now there’s some bad news from Delta Air Lines, there’s this Bloomberg story, the quote is ‘we have to find ways to get that cost passed through to consumers,’ Delta CEO Ed Bastian said, ‘it won’t happen overnight.’ Secretary Duffy, that’s not good.”
Duffy: “So first off, a lot of the carriers are eating the cost increase of jet fuel right now, good side is we have great supply chains for jet fuel into the US, that’s not always the story in the rest of the world, because of Donald Trump’s energy dominance initiatives that he started over a year ago. But listen, we’re having a small spike in jet fuel. But if you look in the out years, we think once this conflict is over, we’re going to see jet fuel go lower than it was before the Iran conflict, so yes, a small disruption, hopefully for a short period of time, but in the long run, it becomes cheaper for Americans to travel because of decreased jet fuel prices.”
Would anyone like to take Sean Duffy’s side with these claims?
I agree with Duffy that airlines are having to absorb most, but not all, of the increased cost of jet fuel. That’s simply because airfare is driven by what consumers are willing to pay, rather than by the cost of operating a flight. That’s why airlines operate many flights at losses, because it’s all about generating incremental revenue, to cover very high fixed costs.
We are seeing airlines try to decrease capacity in order to drive up costs, and we’ve also seen airlines increase checked bag fees. But an actual widespread fare increase is challenging.
But here’s the more fundamental issue — unless things go back to normal very soon, the airline industry is in massive trouble. Airlines simply can’t make money with jet fuel prices where they are. The world’s most profitable airlines will be losing money (though have the luxury of sustaining those for a while), while the world’s other airlines may not be in business for very long. And suffice it to say that airlines going out of business, or even just shrinking a bit, will cause the cost of airfare to increase, given that supply will decrease.
While I think Duffy is completely gaslighting people by suggesting that this is just a “small spike” in jet fuel prices, it’s his long term claims that I find to be most dubious. He thinks once this conflict is over (if that happens any time soon — again, highly questionable), it’ll actually be cheaper for Americans to travel than before the conflict, because jet fuel prices will be lower than they were before?
Could he show his math on those claims, please, that things will be better than ever before? It’s funny, because he says airlines are eating the cost of the increase in jet fuel, but if jet fuel prices go down, he thinks airlines will just pass on all of those savings to consumers?
What will ultimately have the biggest negative impact on airfare is airlines going out of business due to the spike in jet fuel, given that less competition will lead to higher fares.
Either Duffy is lying, or he’s dumb. I don’t know which it is, but no matter how you slice it, his narrative just isn’t right.
Bottom line
I don’t envy the position Sean Duffy is in, having to positively spin a massive crisis that the airline industry can’t sustain for long. But hey, he sure managed to come up with quite the narrative. We’re currently seeing a “small spike” in jet fuel, and most airlines are “eating the cost increase of jet fuel.”
But worry not, “once this conflict is over, we’re going to see jet fuel go lower than it was before the Iran conflict,” and “in the long run, it becomes cheaper for Americans to travel because of decreased jet fuel prices.”
Make it make sense, please?
Absolute MAGA garbage. Airlines are cutting back flights... this will clearly increase prices as Airlines know how to run profitably with fewer flights after the COVID era. This means layoffs, more labor cost cutting and service levels getting even worse due to disgruntled wmployees
You just have to be such a gullible person to believe anything in this administration anymore. These people are robbing us blind and lying to our faces about everything else.
He smacked his head on the pavement between fathering nine children to term.
Shame Puck & Rachel didn't work out!
Duffy might be both lying and dumb. Did you ever consider that? Next he’ll tell you an AA/UA merger would cause a decrease in air fares. We’ve heard that one before, too.
I think the most technically correct explanation is that they will someday be lower than the end of February (when prices were elevated because a war was imminent), so they can claim that pricing is lower than pre-war.
No, Duffy suggested the conflict with Iran is causing higher jet fuel prices (and underplaying that). He then predicts the resolution of the conflict will lead to lower prices than would have occurred without the conflict. This is a far more accurate summarization than the headline suggests. Please, this hurts, don't make me defend Trump or his cabinet again.
Imagined the amount of money that an airline like Emirates its spending in their fleet of A380's and 777-300's with this fuel prices.
...while, in the case of Emirates, flying a lot of planes that are nearly empty.
So let me get this straight. The EU is warning that it will run out of jet fuel in 3 weeks, but the US Secretary of Transportation is saying this is only a "small spike in jet fuel" prices.
Yet another example of our kakistocracy at work.
kakistocracy ....is a perfect word. I commend you.
It will be the same for him whereas the everyday American will face the sting. Different story when you don't fly commercial.
Trump’s cloud-cuckou-land ideal scenario is that he bombs Iran enough to cause some sort of real regime change, so that they open their market up to be pillaged by the US, and the US can steal their oil. But even if that happens, prices will never drop to their pre-war levels because oil companies, who line trumps pockets don’t forget, will try to make as much of a profit as possible. Part of the reason...
Trump’s cloud-cuckou-land ideal scenario is that he bombs Iran enough to cause some sort of real regime change, so that they open their market up to be pillaged by the US, and the US can steal their oil. But even if that happens, prices will never drop to their pre-war levels because oil companies, who line trumps pockets don’t forget, will try to make as much of a profit as possible. Part of the reason this war has been so yo-yo like with the opening and closing of the strait is so insider traders can make a quick buck, and oil companies can boost profits. At the cost of EVERYONE else, and I don’t just mean Americans. Sri Lankans, Filipinos and other Asian countries are paying the highest price for this illegal war.
Prescient points. (And, for Sri Lanka, if you recall, the people already exiled the former president Gotabaya Rajapaksa once before, over the economic crisis the country faced in 2022; now, his brother, also a former president, Mahinda Rajapaksa wants to come back for another round of corruption; I wonder, will the people learn from the US, and not give power back to a corrupt oligarch, or will they follow us and re-elect the criminals; time will tell!)
Duffy is an idiot and speaks like one too: "Jet fuel prices will go up and then come down again. That's what we mean when we will save you all BIGLY money in the long run. MAGA"
Fcukin clown.
This guy doesn't understand the US aviation industry. Airlines operate on razor thin margins and fares are only where they are because of credit card agreements and ancillary fees. Doesn't sound like he's inclined to bail out Spirit if he thinks air fares are headed downwards.
If airlines actually had to make a profit flying people from Point A to Point B in reasonable comfortable and optimal levels of customer service there'd be far...
This guy doesn't understand the US aviation industry. Airlines operate on razor thin margins and fares are only where they are because of credit card agreements and ancillary fees. Doesn't sound like he's inclined to bail out Spirit if he thinks air fares are headed downwards.
If airlines actually had to make a profit flying people from Point A to Point B in reasonable comfortable and optimal levels of customer service there'd be far fewer flights, airline jobs and passengers.
Huh, odd, because, I was told, your guy only picks 'the best people'... (George, quick, claim everyone who disagrees with you/him has TDS! That'll get 'em!) Also, hear me out, maybe, our aviation system isn't just about mere profits for shareholders (wow, I know, probably 'news' for you...); like, the efficient, effective transportation of people, goods, etc. has some inherent value for the society, and maybe, we don't have to just think about RASM/CASM like...
Huh, odd, because, I was told, your guy only picks 'the best people'... (George, quick, claim everyone who disagrees with you/him has TDS! That'll get 'em!) Also, hear me out, maybe, our aviation system isn't just about mere profits for shareholders (wow, I know, probably 'news' for you...); like, the efficient, effective transportation of people, goods, etc. has some inherent value for the society, and maybe, we don't have to just think about RASM/CASM like Tim usually does.
@1990 Your stunning ignorance of economics is baffling. Maybe you should read a book rather than listen to grifters like AOC. Elizabeth Warren and Bernie Sanders. Who all BTW have grifted off their position in government. All three are millionaires on a $175K salary. Maybe you can explain how that happens.
@George
You really don't want to start that. Look inside your own house first and check those R stock portfolios. To say nothing of the grifter-in-chief and his son-in-law.
Thank you for the assist, Dusty. Well said. George has Fox/OAN/Newsmax on 24/7, FULL VOLUME. I've been asking him, politely, to please, turn it down to like a 7/10, so the rest of us can still tolerate existence.
Yeah, George, call me dumb. Good one. If only I could read...
https://www.thedailybeast.com/chief-justice-john-roberts-wife-jane-roberts-made-over-dollar10-million-in-commissions-from-elite-law-firms/
Show me documentation/evidence that AOC is a millionaire. Sanders is a millionaire, which he has admitted. Warren is also a millionaire. But then again, she was a millionaire *before* entering politics as she used to teach at little known universities like Harvard and UPenn (was even among the highest paid professors at Harvard in 1996, reporting from the Crimson).
The irony is, your original comment had some merit about how much smaller the...
https://www.thedailybeast.com/chief-justice-john-roberts-wife-jane-roberts-made-over-dollar10-million-in-commissions-from-elite-law-firms/
Show me documentation/evidence that AOC is a millionaire. Sanders is a millionaire, which he has admitted. Warren is also a millionaire. But then again, she was a millionaire *before* entering politics as she used to teach at little known universities like Harvard and UPenn (was even among the highest paid professors at Harvard in 1996, reporting from the Crimson).
The irony is, your original comment had some merit about how much smaller the airline industry would be if the focus was profitable air transportation. Your rebuttal went way off topic and insinuated things that a little bit of digging and logic would show to be false. Meanwhile, right wing SCOTUS justices (and their spouses) are literally living it up, or working to overthrow legitimate elections.
Short term pain... long term... ironically, also pain.
Let's vote for better leaders in less than 200 days, please.
"While I think Duffy is completely gaslighting people..."
That's the MO / Rule #1 of this entire RICO organization...oops, "administration."
Headline doesn't match what Duffy said. He said that fuel prices will decrease to below pre-conflict levels after the conflict ends and this will result in cheaper plane tickets. He did not say that high fuel prices will lead to cheaper plane tickets. Dishonest Trump-bashing is still dishonesty, which erodes the value of this blog's commentary.
Also, cost decreases in a competitive industry will lead to lower prices to the consumer precisely because it's a...
Headline doesn't match what Duffy said. He said that fuel prices will decrease to below pre-conflict levels after the conflict ends and this will result in cheaper plane tickets. He did not say that high fuel prices will lead to cheaper plane tickets. Dishonest Trump-bashing is still dishonesty, which erodes the value of this blog's commentary.
Also, cost decreases in a competitive industry will lead to lower prices to the consumer precisely because it's a competitive industry. Delta will lose business to United on a comparable route (e.g., Atlanta to Chicago) if United drops prices after fuel-cost declines while Delta does not. Simple economics, which you should be well aware of as the proprietor of a travel blog. Again, dishonest Trump-bashing is still dishonesty, which erodes the value of this blog's commentary.
Yes. It’s really annoying that Ben spins things in a political way to fit his staunch Democrat narrative, like most homosexuals lbgqti. In fact, I quit reading the majority of his blogs because of that, if he would just remain neutral. The guy who he quotes is on X and a huge whining and complaining lefty. Not a good look.
Where did he say 100% of lower fuel costs will be passed to consumers? Liberal logic draws the worst conclusions to drive their anti-Trump rhetoric. Of course airlines will recover their losses. The positive side of this story is that the industry is strong and stable enough for companies to absorb cost uptick. The world economic order is being reset back to what it once was, USA as #1 economic power, and China takeover is being stopped dead in its tracks.
Oh honey. You appear to have the IQ of a snail. Remember kids, stay in school.
Are you high?
You are high.
Oil traded in petrodollars are on the way out, and China is ascendant at this point, whether or not your pea brain likes it.
First Scott Kirby about UA merging with AA and now Sean Duffy.
"Liberal logic"??? Lol, Ben's quoting exactly what he said
"Of course airlines will recover their losses" - and we know this how?
"The positive side of this story is that the industry is strong and stable enough for companies to absorb cost uptick" - huh? Airlines around the world are literally starting to cancel flights because of the increases cost of jet fuel
And lastly, feel free to call it TDS if you don't have...
"Liberal logic"??? Lol, Ben's quoting exactly what he said
"Of course airlines will recover their losses" - and we know this how?
"The positive side of this story is that the industry is strong and stable enough for companies to absorb cost uptick" - huh? Airlines around the world are literally starting to cancel flights because of the increases cost of jet fuel
And lastly, feel free to call it TDS if you don't have answer, but how did we get to a conversation about the global economic order?
Scott Kirby was doing the merger talk because Sean the con suggested that the fat orange Nazi liked "big deals." Kirby was sucking up to the RICO violation that is this administration. All dishonest travel roads lead to Sean the con.
Idk I could see it (but I’m not necessarily saying Duffy was thinking any of this) - oil bros are heavily investing in alternative sites away from the Middle East. Fundamentals of economics- increased supply especially when ME resumes full capacity. Problem is that is years away from materializing. In the short term, high costs could push some airlines to restructure. Lower their cost structure, particularly on labor- given how elastic demand is for airfare,...
Idk I could see it (but I’m not necessarily saying Duffy was thinking any of this) - oil bros are heavily investing in alternative sites away from the Middle East. Fundamentals of economics- increased supply especially when ME resumes full capacity. Problem is that is years away from materializing. In the short term, high costs could push some airlines to restructure. Lower their cost structure, particularly on labor- given how elastic demand is for airfare, they could then lower ticket prices as that will cause a spike in demand.
Is any of this what he meant? Probably not. But economy airfare adjusted for inflation is continuously decreasing - no reason it will suddenly stop now once this period has passed
I completely agree with Ben that Duffy - and all of the cabinet and administration - is gaslighting the American people about the degree and length of fuel price increases because the Iran conflict has gone very differently than what they had hoped.
That said, I do understand the logic for lower long term fuel prices IF things turn out the way they are planning. Iran's oil - just like Venezuela's - was not...
I completely agree with Ben that Duffy - and all of the cabinet and administration - is gaslighting the American people about the degree and length of fuel price increases because the Iran conflict has gone very differently than what they had hoped.
That said, I do understand the logic for lower long term fuel prices IF things turn out the way they are planning. Iran's oil - just like Venezuela's - was not being sold freely on global markets, in part because of western (including US) sanctions. Venezuelan and Iranian oil was going to their benefactors but not to the global market. They have crowed that Venezuelan oil is now flowing to the global market and not propping up countries the US does not like and expect the same thing to happen to Iranian oil. Iran is not going down like Venezuela did.
Specific to the airline industry, the longer timing of timing of the conflict and the amount of oil price hikes will mean that there will be substantial damage to the airline industry; failures in some quarters, consolidation in others.
Does this really make such a huge difference? If major energy importers such as India and China are able to procure oil outside of the main global commodity trading mechanisms, surely they'll just buy less of it through those channels and the overall effect on prices will more or less balance out on a global scale.
There have been major countries like China and India that have been paying below market fuel prices including from Russia.
Moving countries from "out of global market pricing" to "in global market" should THEORETICALLY decrease global prices while increasing fuel prices to "off market" purchasers.
Whether it all happens or not remains to be seen but the US and OPEC would all like to get rid of "out of global market pricing"
but let's...
There have been major countries like China and India that have been paying below market fuel prices including from Russia.
Moving countries from "out of global market pricing" to "in global market" should THEORETICALLY decrease global prices while increasing fuel prices to "off market" purchasers.
Whether it all happens or not remains to be seen but the US and OPEC would all like to get rid of "out of global market pricing"
but let's also be clear that the administration is grasping for any justification possible to justify the Iran conflict that is not turning out as they expected based on previous Iran conflicts as well as the Venezuela conflict.
Better question: would anyone like to raise their hand and feel sorry for airlines? Tell the airlines to go cry in the lap of Amex, Chase and Citi.
Politicians (and readers) on both sides of the aisle can say what they want. The proof will be in the pudding. For the two years prior to the present circumstances, oil was trading in the $55 to $60 per barrel range. In a year, let's revisit the matter to see what has actually unfolded. In two years. In three years.
In other news, Cathay Pacific has reopened the newly renovated Wing First Class lounge :D
So... are you saying China is doing better than us? *pouts like a little child*
(Also, that's what Xi said...)
Sean had a few too many Duff beers...
It seems that what matters nowadays is believing only in the ideas that you like or make you look good, even if they're patently false.
What do you expect from C and D class students in this administration. But I am reminded of an Orwell quote:
"The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command."
The US economy will, as it has done so before, take the world economy off a cliff, and into a deep recession, only this time, marked by stagflation, sustained high energy prices (and food too), all thanks to "America First". The country and its leadership are imbeciles.
Well, maybe he is saying the quiet part loud.
With a deep depression, oil price would plummet but no demand due to job losses. Remember 2002 or 2009
Pity you don't know what an economic depression is.
Go educate yourself, and try again.
What else can you expect from a cabinet full of sycophants and/or morons?
It's an obvious point, but you're do TDS inflicted to see it. Iran has been at war with the US and israel for 45 years, this didn't start overnight. Remember they attacked Israel unprovoked, ostensibly due to Israel defending themselves against Palestinian terrorists. They've been creating instability in the ME for decades.
Iran will no longer have the military capability or the hard currency (no pallets of cash airdrops incoming) to threaten their neighbors...
It's an obvious point, but you're do TDS inflicted to see it. Iran has been at war with the US and israel for 45 years, this didn't start overnight. Remember they attacked Israel unprovoked, ostensibly due to Israel defending themselves against Palestinian terrorists. They've been creating instability in the ME for decades.
Iran will no longer have the military capability or the hard currency (no pallets of cash airdrops incoming) to threaten their neighbors directly or through proxies. Once a more moderate group gets into power there, the regional stability, security, and ultimately more investment (see Venezuela), supplies will increase and prices decrease.
So on the flip side, post war with a weakened Iran, why would you believe oil prices will be higher than before the war?
TDS works both ways there, bootlicker.
Willfully ignorant is the easiest way to identify someone with a low IQ. Stay in schools, kids.
It's an obvious point, but your brain has been too addled by Fox News to see it. America is in rapid decline and is going to look a lot more like Venezuela in the coming years. The rest of the world is already moving way past the diminished husk of what was once America. It took two world wars and several decades for the British Empire to decline as much as the US has in the past year under Trump.
Yes!!!
Um, you really are not keeping up with the program, are you? TDS=Trump Delusional Syndrome. And you seem to be a prime example of this phenomenon. The world wide damage being inflicted by this needless war will take years to undue. Fuel scarcity has become severe in Asia and the economic fallout is cascading throughout supply chains. The collateral damage is immense.