Atlanta
- Lower fuel prices have moderated airfares and could lower them further should
fuel prices stay low, Delta Air Lines president Ed Bastian said on Monday at
the Association of Corporate Travel Executives Global Corporate Travel
Conference here.
"If we're going to see fuel
staying at the $50 to $70 trading range, you'll see prices fall," Bastian
said in an acknowledgment of analysts’ recent assertions. "With lower fuel
costs, it's natural you're going to find more capacity coming into the
marketplace because it's efficient to fly, and it's going to put a ceiling on
pricing."
Though airline fuel-hedging strategies
have delayed the impact of fuel prices on fares—Delta so far has enjoyed "about
50 percent of the benefit" on its bottom line from lower fuel costs,
Bastian said—Delta's year-over-year unit revenues are flat to down across the
board, he said, indicating that fares have modulated. Should fuel prices remain
low, that would continue throughout the summer, he said.
Delta executives late last year
said they hoped fuel prices would have only a minimal impact on pricing.
Bastian on Monday reiterated that Delta still plans to control capacity growth
despite fuel cost savings and that he hopes other airlines would do the same.
"Before we start taking $50 to
$60 oil as the new norm, we want to make certain it's going to stay there,"
he said. "The last thing we want to do is use that price to plan the
future. You've all seen that movie before, and it didn't have a happy ending."
Bastian also said that Delta is
seeing a year-over-year shortfall of about $1 billion this year as a result of
the U.S. dollar strengthening against most foreign currencies. Additionally, he
predicted that U.S. airlines—which, unlike many airlines in other countries,
remain profitable—would partner with carriers around the world in the coming
years.
"You'll see us doing more
deals. SkyTeam is important," he said of Delta's alliance with 19 non-U.S.
carriers, "but what's more important are the bilateral company
relationships through technology and shared investment, such as what we have
with Virgin Atlantic. You're going to find the U.S. branching out more globally
as a result of that."