Sylvie Willis
Fuel costs make up a significant portion of airlines' expenses. United Airlines, for example, spent $8.9 billion on fuel in 2019, accounting for approximately 23% of its total expenses that year. In 2021, the airline's fuel consumption amounted to just over 2.7 billion gallons, representing a 36% increase compared to 2020. United Airlines' fuel bill for the first quarter of 2024 was $2.9 billion, with an average aircraft fuel price per gallon of $2.88, two cents higher than its competitors, American Airlines and Delta Air Lines. The airline has also adopted a gas station-style pricing strategy for seat assignments, charging prices such as $99.99, $129.99, or $249.99 for preferred seats. Like other airlines, United Airlines has dealt with rising jet fuel prices, which have impacted its profitability and resulted in higher costs for passengers.
| Characteristics | Values |
|---|---|
| Fuel expenditure in 2019 | $8.9 billion |
| Fuel expenditure as a percentage of total expenses in 2019 | 23% |
| Fuel expenditure in Q4 2023 | $3.32 billion |
| Fuel expenditure in 2023 | $12.651 billion |
| Fuel expenditure in Q1 2024 | $2.9 billion |
| Average aircraft fuel price per gallon in Q1 2024 | $2.88 |
| Fuel consumption in 2021 | 2.7 billion gallons |
| Average jet fuel price in Q3 2023 | $2.95 per gallon |
| Expected jet fuel price in Q4 2023 | $3.28 per gallon |
| Fuel surcharges | Passed on to consumers |
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What You'll Learn
United Airlines' fuel costs in 2019
Fuel costs make up a significant portion of airlines' expenses. In 2019, United Airlines spent $8.9 billion on aircraft fuel, approximately 23% of its $38.9 billion in expenses that year. This was still less than the airline's biggest expense: salaries for its 96,000 employees, which totalled $12 billion (30%).
United Airlines paid an average of $2.02 per gallon for jet fuel in 2019, 13% below the same period the previous year. This was despite a September terrorist attack on Saudi Arabian oil facilities that caused a brief price spike. United's per-gallon fuel cost was 10 cents less than the low end of the company's forecast.
United Airlines raised its 2019 profit forecast for the second straight quarter, citing strong travel demand and lower-than-expected fuel prices in late summer. The airline expected full-year growth of 3.5% in its capacity of flights and seats, in line with its forecast in July.
In March 2024, US airlines' fuel cost per gallon was $2.77, up $0.74 (36.7%) from March 2019. United Airlines' average aircraft fuel price per gallon was $2.88 in Q1 2024, two cents higher than that of American Airlines, and three cents higher than that of Delta Air Lines.
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Fuel costs in Q4 2023
Fuel costs make up a significant portion of airlines' expenses. For example, United Airlines spent $8.9 billion on fuel in 2019, accounting for approximately 23% of its total expenses that year. In Q4 2023, United Airlines spent $3.32 billion on fuel, similar to its fuel costs in Q4 2022. However, the airline's full-year fuel expense for 2023 is expected to be $12.651 billion, a decrease of over 3.5% compared to 2022.
The average aircraft fuel price per gallon for United Airlines in Q4 2023 was $2.88, with the airline paying an average of $2.95 per gallon for jet fuel in Q3 2023. This was a significant decrease from the almost $3.95 per gallon spent in the same period in 2022. However, United Airlines expected jet fuel prices to rise to $3.28 per gallon in Q4 2023, impacting its profitability.
According to the Bureau of Transportation Statistics (BTS), the cost per gallon of fuel in September 2023 was $3.14, an increase of 11.4% from August 2023 and 60.6% from September 2019. Year-over-year changes in fuel consumption and cost for September 2023 included a 6.0% increase in domestic fuel consumption, a 4.2% decrease in domestic fuel cost, and a 9.6% decrease in the cost per gallon.
While United Airlines reported better-than-expected earnings in Q3 2023, its outlook for Q4 2023 has worried investors due to the increasing cost of jet fuel. The surge in fuel prices since the beginning of July has negatively impacted the stock prices of United Airlines and other US airlines, including Delta Air Lines, American Airlines, and Southwest.
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Fuel costs in 2024
Fuel costs make up a significant portion of airlines' expenses. In 2019, United Airlines spent $8.9 billion on aircraft fuel, which was approximately 23% of its total expenses that year. In 2023, the airline's full-year expense on fuel was $12.651 billion. Looking at the first quarter of 2024, United Airlines' fuel bill was $2.9 billion for the first three months, a 6.9% reduction year-on-year.
The cost of jet fuel has been volatile, especially with the outbreak of conflicts worldwide. While 2023 saw a slight reduction in fuel costs, airfares increased globally, indicating rising fuel costs and other expenses, including labour. The average crude oil price in 2023 was $82.5 per barrel, with a crack spread of $30 per barrel, reflecting tight supply amid recovering demand.
In January 2024, the cost per gallon of fuel in the US was $2.70, a 3.4% decrease from December 2023. In March 2024, the cost per gallon was $2.77, a 2.2% decrease from February. In May 2024, the cost per gallon was down 3.8% from April, and in September 2024, it was down 5.6% from August.
American Airlines' average aircraft fuel price per gallon was $2.86 in the first quarter of 2024, two cents higher than United Airlines'. During the same quarter, Delta Air Lines' average fuel price per gallon was $2.79, while Southwest Airlines' was $2.92.
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Fuel costs compared to competitors
Fuel costs make up a significant portion of airlines' expenses. In 2019, United Airlines spent $8.9 billion on aircraft fuel, which accounted for approximately 23% of its total expenses that year. In comparison, United Airlines' biggest expense was the $12 billion spent on salaries for its 96,000 employees, constituting 30% of its total expenses.
In the first quarter of 2024, United Airlines' fuel bill was $2.9 billion, a 6.9% reduction year-on-year. During the same period, the average aircraft fuel price per gallon for United Airlines was $2.88. This was slightly higher than American Airlines' average aircraft fuel price per gallon of $2.86, and Delta Air Lines' price of $2.79. Southwest Airlines had a higher average fuel price per gallon than United Airlines at $2.92.
In the Asia-Pacific region, Singapore Airlines spent $987 million on fuel in the second quarter of 2021, constituting 28.8% of its half-year expenditure. In comparison, its total fuel costs for the financial year 2023/2024 decreased from $5.2 billion to $5 billion. IndiGo, a low-cost carrier in India, experienced a 6.5% increase in fuel costs in the fourth quarter of FY24, amounting to $713.8 million.
Fuel prices have been volatile, especially with global conflicts, and airlines have passed on some of these costs to consumers through fuel surcharges. While 2023 witnessed a slight dip in fuel costs, airfares rose globally due to rising fuel and labour costs. The International Air Transport Association (IATA) reported that the average crude oil price in 2023 was $82.5 per barrel, with a high crack spread of $30 per barrel, indicating tight supply amid recovering demand.
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Fuel surcharges
Fuel costs make up a significant portion of airlines' expenses. For example, United Airlines spent $8.9 billion on aircraft fuel in 2019, approximately 23% of its total expenses that year. In Q1 2024, the airline's fuel bill was $2.9 billion, a 6.9% reduction year-on-year.
Airlines use fuel surcharges to pass on some fuel costs to consumers. Fuel surcharges can vary by airline and route, with some carriers like British Airways, Emirates, and Lufthansa known for high fuel charges. However, United Airlines is one of the few airlines that do not charge any fuel surcharges, either on its own flights or those of its partners. United's frequent flyer program, MileagePlus, also does not pass on fuel surcharges for award tickets. This makes United Airlines a good option for those looking to avoid fuel surcharges.
Other airlines that do not levy fuel surcharges include Singapore Airlines, which does not charge fuel surcharges on its own flights or pass them on from some partners, including United. Avianca LifeMiles also does not pass on fuel surcharges, and award costs are generally lower than United's MileagePlus program. Additionally, you can fly on Japan Airlines without fuel surcharges by using American Airlines or Alaska Airlines miles.
On the other hand, some airlines will pass on fuel surcharges to their partners. For example, Delta Air Lines will pass on fuel surcharges for itineraries originating in Europe on Delta, Air France/KLM, and Virgin Atlantic. American Airlines does not charge fuel surcharges when using another airline's miles to book a flight, but two of its partners, British Airways and Iberia, do charge fuel surcharges. China Airlines also has fuel surcharges on several routes, but there are no fuel surcharges when using Delta SkyMiles to book a China Airlines flight to Taipei.
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Frequently asked questions
United Airlines spent $8.9 billion on aircraft fuel in 2019, approximately 23% of its total expenses that year.
United Airlines' fuel bill for the first three months of 2024 was $2.9 billion, a 6.9% reduction year-on-year.
The average aircraft fuel price per gallon for United Airlines was $2.88 in Q1 2024.
United Airlines consumed just over 2.7 billion gallons of fuel in 2021, an increase of about 36% compared to 2020.
