Delta Raises Fares as Holiday Travel Demand Stays Strong

Delta Air Lines expects higher fares and continued travel demand through the holiday season after reporting third-quarter results, with the airline facing rising fuel expenses while passengers continue booking flights and paying more for air travel.

According to Delta, jet fuel costs increased 60% in the third quarter, adding $1.6 billion compared with a year earlier. Passengers paid about 15% more for flights, helping the company post a slight increase in net income.

Delta CEO Ed Bastian said the airline avoided a major profit decline despite the fuel increase after reporting the results.

"To not to dent those profits, to me is incredible," said Ed Bastian, CEO of Delta Air Lines.

Bastian described the impact of the fuel increase compared with previous disruptions in the industry.

"In past cycles, past shocks, if we saw a 60% increase in fuel prices, we’d be flat on our back," said Ed Bastian, CEO of Delta Air Lines.

The airline chief said demand remains strong despite higher fares and expects elevated pricing and travel interest to continue through the end of the year and into the next period.

Travel economist Hayley Berg of Hopper said holiday travelers are booking earlier than in previous years and paying higher prices for tickets.

"Thanksgiving already averaging $400 a ticket, up 31% year over year," said Hayley Berg, lead economist at Hopper.

Berg also provided pricing details for another major holiday travel period. The figures reflected continued increases in average ticket prices compared with the previous year.

"Christmas, which is always about $50 more expensive than Thanksgiving, about $450, up 23% year over year," said Hayley Berg, lead economist at Hopper.

Delta told investors that strong demand has allowed the airline to maintain higher fares even as fuel prices remain a major expense. The company said premium seating revenue rose 18%.

Bastian said fuel costs helped push airlines to adjust prices, while customers have continued accepting the higher fare levels.

"Fuel has been the impetus for the industry to move quickly to adjust the pricing environment," said Ed Bastian, CEO of Delta Air Lines.

The Delta CEO continued that the current pricing environment appears stable based on customer response. The airline has also benefited from limited seat availability, which contributed to fuller flights.

"But given the fact that the market has accepted these price points… I think where we’re at is very sustainable," said Ed Bastian, CEO of Delta Air Lines.

Delta reported that available seats during the completed summer travel quarter were essentially unchanged from a year earlier, while 86% of available seats were filled. The company lowered its guidance for the rest of the year after earnings came in slightly below Wall Street expectations.