Key insights
- Delta Air Lines is increasing checked baggage fees due to soaring jet fuel prices driven by Middle East tensions. This follows similar moves by United and JetBlue. While Delta has some protection via its refinery, rising fuel costs pressure airline margins, potentially impacting earnings and consumer spending on travel. This could have a slightly negative impact on the broader market.
April 7 (Reuters) - Delta Air Lines said on Tuesday it will raise fees for checked bags on domestic and select short-haul international routes, as airlines seek to offset soaring jet fuel costs linked to escalating tensions in the Middle East.
The increase marks the first hike in Delta's domestic baggage fees in two years and follows similar moves by rivals United Airlines and JetBlue Airways.
Airlines worldwide are grappling with sharply higher fuel prices, which have driven up operating costs and squeezed margins, after tensions in the Middle East disrupted the Strait of Hormuz, a key oil shipping corridor.
Jet fuel, which had averaged about $85 to $90 a barrel before the U.S. and Israeli strikes on Iran in February, has surged to around $209 per barrel globally, according to the International Air Transport Association (IATA).
Delta said fees for first and second checked bags on bookings made on or after Wednesday will increase by $10 each, while the cost of a third checked bag will rise by $50.
As a result, the fee for a first checked bag will increase to $45, the second to $55 and the third to $200.
Delta, unlike some of its rivals, has a buffer in the form of a subsidiary-owned refinery in Pennsylvania with a capacity of about 190,000 barrels per day that supplies nearly three-quarters of its fuel needs, though it remains exposed to spikes in crude oil prices.
Checked baggage benefits tied to Delta's frequent-flyer programs, premium fares and co-branded credit cards will remain unchanged.
Delta also said there will be no changes to baggage fees on long-haul international routes.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Vijay Kishore)