Calculating the airlines' fuel costs

August 19, 2008 7:34:38 PM PDT
If you think it hurts to fill-up your car-- imagine what it's like for an airline to fuel a 60,000 gallon 747. A fill up runs well over $200,000 and that's why ticket prices are going up.

But, how much of your airfare actually goes toward jet fuel? There aren't a lot of options when it comes to jet engines.

"Jet engines have never been known for their fuel efficiency," says ABC7 airline analyst Ron Wilson. Newer airplanes are better than older ones. But, as they say, it's relative.

"There is a bit of competition on building a fuel efficient engine, but you've got to develop enough thrust in those engines for an airplane to fly and maintain altitude and airspeed," says Wilson.

The major U.S. carriers have mostly older airplanes. But, Virgin America, which just celebrated its one-year anniversary flying out of San Francisco, has all-new Airbus 320's.

CEO David Cush says that makes Virgin about 30 percent more fuel efficient than the older carriers, and that gives them a slight break.

"I think it means we're losing a little bit less. I mean, that's the best way to put it in our indusatry these days."

Historically, labor was the largest cost for airlines -- now it's fuel.

So how much of your airfare is going to cover that cost?

Airline industry analyst Darin Lee has designed what he calls a widget on his website to make that calculation. All you need is your itinerary, roundtrip fare and type of aircraft.

Alicia Kagawa flew roundtrip San Francisco to Los Angeles for $250 dollars. That means more than $90, about 36 percent of her airfare went to fuel.

"That's shocking," says Alicia.

But these days, it's probably about right. Lee says fuel now accounts for about 30 percent of carrier costs, versus 13 percent eight years ago. Cush says the airlines had no business model to deal with oil at its peak.

"I think people were trying to figure out what to do about this. There is not a business model at $145. What we thought was that fuel pricese are still going up," says Cush.

The airline industry is expected to lose $10 billion year, so even if oil continues to drop, don't expect airfares to follow.

LINKS
Airline ticket fuel cost calculator


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