American Airlines CEO Doug Parker is refuting recent predictions of a fare war.
Flight passengers can expect ticket prices to go up this year, according to one airline CEO.
Talk of a fare war among airlines spiked this week after United Airlines announced it would add extra flights and larger aircrafts in order to compete with low-cost carriers. But American Airlines CEO Doug Parker put speculation to rest during the airline's earnings conference call Thursday, saying ticket prices would likely become more expensive this year.
According to Parker, airfare will go up due to higher oil prices, USA Today reports.
"Fares are too low for oil prices this high, and over time you'll see that adjust, but it takes time," he said.
Parker said crude oil prices have risen to $70 per barrel from $50 over five months and are currently at a three-year high. He said American, the world's largest carrier, will have to increase prices because at the current rate, the airline stands to lose $1.8 billion on fuel this year alone.
While this is a relief for Wall Street after airline stock prices took a big hit on Wednesday, Parker said it's not all bad news for passengers because the airline will not be cutting down on flights in response to the surge in oil costs.