US Airlines will likely raise rates to combat rising oil prices, says US Airways Chief Executive Doug Parker.
“As oil prices move up, fares will go up as they need to,” he said at a Goldman Sachs investor conference.
Parker said US Airways “aggressively” hedges its fuel costs, which are the Tempe, Ariz.-based airline’s largest expense.
But “there’s only so much you can do in regard to hedging,” he said. “At the end of the day, we’re going to be paying more for oil. The next thing is to do what we can to raise fares to cover the costs.”
Mr Parker didn’t say how much or when fares would likely rise. But if oil prices remain around $100 per barrel, the airline industry will have to be restructured, he said.
“We’ve been through a painful restructuring since 2001, but we’re still not fixed. And the thing that can get us to where we can act like other businesses — and pass along higher costs like other businesses do — is to get ourselves to be a more mature and rational business, one that is not nearly as fragmented as the one we’re in now.”
Mr Parker has been a proponent of industry consolidation since US Airways and America West Airlines merged in 2005.
Parker said if any airlines are going to merge, they’ll need to announce their intentions soon — probably by the end of the year. Otherwise, he said, federal regulators won’t have enough time to approve the deal until the new presidential administration takes office in January 2009.
Report by David Wilkening
