Delta Air Lines has announced that flights to Japan will be reduced in the wake of the tsunami and earthquake. Falling demand and rising costs have caused numerous airlines to cut service to and from Japan after the nation was rocked by natural disaster. The entire airline industry is facing falling revenues and rising fuel prices.
Major airlines cut service to quake-ravaged Japan
The number of flights going in and out of Japan is being reduced across the board, as major airlines have too little demand and costs are too high to keep sending flights, according to Bloomberg. Service to and from Japan is being reduced by the Qantas JetStar line, Singapore Airlines, Cathay Pacific Airways and Korean Air Lines, as the earthquake that struck on March 11 has crippled demand.
Delta, according to Reuters, will reduce service levels 15 to 20 percent until May. The company estimates that the quake, tsunami and nuclear disaster will cost it $250 to $400 million. However, American Airlines has not yet announced it will reduce its service to Japan, which is provided through a joint venture with Japan Airlines. More than 9 million people fly to the U.S. from Japan each year.
Fuel prices wreak havoc with airlines
Airlines worldwide have been contending for the past several months with rising jet fuel prices. Rising oil prices due to unrest in Libya and the Middle East have been part of the increased cost of jet fuel, but harsh winter conditions during the past few months have also negatively impacted fuel prices and airline revenue. As a result, air fare increases are being implemented by numerous airlines. Southwest Airlines, for instance, has already had to raise air fares six times since the beginning of the year, according to Forbes, despite a 13 percent increase in the number of passengers flying with Southwest since the same period last year.
Expect summer vacation to cost a bit more
The increases in oil, gasoline and jet fuel prices have nothing to do with any actual shortage of supply caused by unrest in Libya, which provides only 2 percent of world supply, according to CNN. Speculators raise prices because of fears that the unrest will spread.
Unfortunately means that a full tank of gas is going to cost more during the summer, and some people may need installment loans to finance plane tickets for summer travel. How much more costly air tickets will become remains to be seen, but projections seem to indicate that the cost of travel will continue to rise for some time.