Largest U.S. budget airline Frontier reports 71% jump in airfares

Frontier Airlines, the largest U.S. budget carrier, reported a 71% year-over-year increase in its average airfare in the third quarter. The company was seeking to pass on the sharp rise in jet fuel costs to passengers, CNBC explains. The airline’s fuel bill soared 82% to $425 million in the quarter.

Including its many additional fees, such as those for checked and carry-on bags, Frontier’s total revenue per passenger rose 30% year over year to $138.22 in the third quarter. Much of that growth came from the 71% increase in average airfare, or fare revenue per passenger, to $67.82 versus $39.74 a year earlier. Quarterly revenue rose 53% to a record $1.35 billion.

Passengers kept booking despite the higher prices, CNBC reports. Frontier carried more than 9.8 million passengers in the third quarter, up 18%, or 1.5 million, from a year earlier. The budget carrier stated that demand remains strong even at current prices. Nevertheless, despite those strong results, the airline’s third-quarter net loss widened to $104 million versus $77 million a year earlier. Excluding one-time items, Frontier earned $40 million, or $0.18 per share, significantly exceeding its own guidance, according to the company.

Frontier shares rose more than 9% to $6.07 apiece in trading on Wednesday.

Airlines from Delta Air Lines to Frontier report that passengers are largely continuing to fly despite higher fares, CNBC writes. However, record jet fuel prices are eroding profits. Fuel is carriers’ second-largest expense after labor. According to the latest IATA Jet Fuel Price Monitor, the global average jet fuel price reached $196.70 per barrel in the week ended October 23, up 118.5% from a year earlier.

Rising jet fuel prices threaten to drive a record increase of up to 20% in European airfares next year, Michael O’Leary, CEO of Ryanair, Europe’s largest airline, warned on October 20. Even that may not be enough to cover carriers’ “dramatically higher” fuel bills, he said.