DALLAS (AP) — Startup discount carrier Breeze Airways said Tuesday it will add 35 routes from 10 more cities including some on the West Coast this summer in an aggressive expansion just as jet fuel prices are soaring to an 8-year high.
“Fares have got to go up to cover the extra fuel costs, and whenever fares go up, demand suffers a little bit,” Breeze founder David Neeleman said in an interview.
Breeze has been flying mostly in the Southeast and East since it began operating last May. Neeleman said the airline will add flights this summer to Los Angeles, San Francisco, Las Vegas and Jacksonville, Florida, among other cities.
Many of the flights will use 126-seat Airbus A220 jets, which are larger than Breeze’s current fleet of Embraer planes.
Breeze and fellow startup Avelo believe they can find a niche on routes that have been overlooked or abandoned by bigger airlines — usually a smaller city on one or both ends. Their ability to thrive — or even survive — is complicated, however, by the recent surge in jet fuel prices following the rise in oil prices.
Spot prices for Gulf Coast jet fuel have doubled in the past 14 months and risen one-third just since the start of this year. Since fuel can amount to one-third of airline’s costs, it’s a big item.
Neeleman said Breeze assumed lower fuel prices when it laid out its expansion plan — although he declined to say how much lower.
“It wasn’t $130 a barrel, that’s for sure,” he said, citing the peak price of oil futures early Monday, although they later retreated.
Neeleman said more-efficient A220 jets will limit fare increases to between $3 and $5 per seat for every $1 jump in jet fuel, which has climbed from around $2 to nearly $3 a gallon since January 2021, according to Energy Department figures. He said the higher prices caused the airline to scale back some planned flights without dropping any destinations entirely.