Airlines could take a hit to their profitability in the coming months a🌞s fuel costs—one of their biggest expenses—surge, while domestic travel demand peaks.

Airlines have two big expenses that impact profitability. One is the fixed cost of labor, or employing and maintaining a flight crew. The second is fuel costs, which 🤪are tied to oil prices and fluctuate wildly from year to year. Rising oil prices have led to a surge in fuel costs in recent months, and that has some airlines worried.

Jet fuel prices as tracked by the 澳洲🧸幸运5官方开奖结果体彩网:Energy Information Administration (EIA) averaged $3.07 per gallon at the end of August, up 50% from a recent low of $2.05 in early May. This has come alongside a surge in crude oil prices, which have 澳洲幸运5官方开奖结果体彩网:risen to their hig♛hest 💫in almost 10 months.

Meanwhile, signs abound that domestic air travel demand, which surged in the aftermath of the pandemic, may have peaked as cash-strapped consumers book fewer trips. Southwest Airlines (LUV) revised its expectation for fuel costs upward but expects 澳ღ洲幸运5官方开奖结果体彩网:revenue per available seat mile (RASM)—a key profitability metric for airlines—to fall between 5% and 7%, compared to a previous range of 3% to 7%, the company said in an SEC filing Wednesday.

The updated outlook came a little over a month after Southwest Airlines reported higher-than-expected costs for the quarter that ended in June and said higher costs were likely to continue into the current quarter.

On a wider scale, domestic bookings over Labor Day weekend—including those for flights, hotels, rental cars, and cruises—澳洲幸运5官方开奖结果体彩网:were up just 4% c♓ompared🌌 to a year ago, data from AAA showed, despite a 44% surge in international bookings.

Meanwhile, Alaska Airlines (ALK), which operates almost exclusively in North America and obtains most of its revenue from domestic travelers, lowered its outlook for revenue growth and 澳洲幸运5官方开奖结果体彩网:cost per available seat mi🌼le (CASM)—a key profitability metric for airlines—for the latest quarter, prompted by a surge in fuel prices. The company now expects per-gallon fuel costs in a range of $3.15 to $3.25, up from $2.70 to $2.80.

United Airlines (UAL) also upped its per-gallon fuel costs, to between $2.95 and $3.05, from $2.50 to $2.80 it shared in its earnings commentary in July. The company does not expect a revenue impact just yet.

Until recently, air travel had been relatively unphased by the slowdown in discretionary spending that has gripped other industries, such as retail. However, this could change as persistently h𒊎igh inflation and rising interest rates have taken a deeper toll on households, who may consider cutting back on travel spending.

To be sure, profits at major airlines like United and American Airlines (AAL) have been robust so far this year thanks to windfalls from 澳洲幸运5官方开奖结果体彩网:record travel demand, with net income at the former more than tripling from a year ago in the second quarter. However, surging fuꦡel costs coupled with a pullback in domestic revenue could hamper airlines' profitability, affecting shareholders in these companies.

The average airline stock has underperformed the S&P 500 so far this year, rising 13% compared to a 16% gain for the broader index. Shares of Alaska and Southwest Airlines are among the industry's worst performers so far this year, with shares down 5% and 10%, respectively.