Airlines Increase Fares Due to Rising Fuel Costs

Because jet fuel accounts for 20% to 40% of an airline's operating costs, any spike in oil prices directly impacts ticket fares.

To protect themselves, many airlines use a strategy called fuel hedging, which locks in fuel prices in advance.

However, this is a double-edged sword; if market prices drop, airlines may remain stuck paying higher, pre-negotiated rates.

For passengers, this means air travel is becoming more expensive.

While airlines strive to maintain demand, there is a threshold where prices discourage travel, known as demand destruction.