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CNN10 2022-03-18

CNN 10

Rising Jet Fuel Costs Impact Airline Ticket Prices; America's Central Bank Raises Interest Rates; France's Eiffel Tower Grows Taller By 20 Feet. Aired 4-4:10a ET

Aired March 18, 2022 - 04:00:00 ET


CARL AZUZ, CNN 10 ANCHOR: From the flight deck, this is your Captain Carl Azuz. We expect this quick 10-minute hop to be awesome, just like the Friday you're traveling on. Thank you for flying with CNN 10.

If you're planning to board a real jet this spring break or summer, the plain truth is it's going to be more expensive. Prices are climbing like the jets themselves.

There are several reasons for this. One is demand. People want to travel. The head of Delta Airlines says he's never seen demand ramp up so quickly as it has after the omicron wave of COVID, which hit the U.S. late last year.

Planes are filling up with some flights reportedly carrying as many passengers as they did in 2019 before the pandemic, but most airlines still aren't operating as many flights as they were then. They're still having trouble finding enough workers and there been some delays in getting new planes delivered.

Also, while more Americans are traveling within the United States for fun, they're not traveling as much for business. Many people are still working from home as they started doing in 2020, so that's reduced a significant number of airline bookings. The head of American Airlines suggests COVID rules continue to affect international leisure travel but he says a huge number of people still want to do it and that if countries remove their restrictions, international bookings could grow back to their 2019 levels by the end of this year.

A big reason why all bookings are getting more expensive though is the cost of jet fuel. Mirroring the cost of gas, it's taken off over the past year.

What's interesting here is that crude oil prices which factor heavily into the cost of gasoline and jet fuel, they've dropped a little since last week when they hit their highest prices in 13 years.

But fuel costs didn't reflect that right away. Experts say gas prices rise like rockets but fall like feathers -- meaning, they're quick to increase when oil prices do but they take a while to settle back down after oil prices drop. For airlines, 20 to 25 percent of their operating expenses come from fuel costs alone. It's their largest expense after paying their workers.

So, when jet fuel costs go up --(BEGIN VIDEOTAPE)

PETE MUNTEAN, CNN CORRESPONDENT (voice-over): Spring break starts at the airport where people are flying more than ever since the start of the pandemic and they are already paying more.

They're friends of yours?

DELEALH SHARP, TRAVELER: Yeah, this is my friend.

MUNTEAN: Deleah Sharp of Michigan was about to treat herself for her birthday next month.

SHARP: And I was deciding to go to Aruba and in two days, it went up $300.

MUNTEAN: That's a lot.

SHARP: And I miss the $300 less, so I decided not to go.

MUNTEAN: Jet fuel has spiked to its highest level in more than two years. A CNN analysis of federal data found filling up a Boeing 737 has shot up $6,800 since the invasion of Ukraine and $13,000 in the last year.

Delta, United and JetBlue all say they will pass the cost on to consumers.

DARIUS DOLL, TRAVELER: If it became unreasonable, I think people would forego traveling. It would just depend on how much it would be and how bad you want to go somewhere.

MUNTEAN: To conserve costs, airlines like Alaska and Southwest say they will slash some flights from schedules. But airline experts say do not be shocked if carriers get even more creative, charging more for things like Wi-Fi, food, or seat selections.

HENRY HARTEVELDT, ATMOSPHERE RESEARCH: If you're paying 75 percent more than you were a year ago to gas up your car, I think you can relate to the plight airlines are facing when they have to pump tens of thousands of gallons of fuel into every one of their planes to transport us.

MUNTEAN: Experts think carriers could get away with charging more since so many people want to fly. American Airlines says demand for travel is at an all-time high. Now, airlines will have to balance ticket prices or push more people towards staycations.

BILL EISELE, TEXAS A&M TRANSPORTATION: I think this summer we could actually see a lot of people staying closer to home if these gas prices continue to increase.

HARTEVELDT: I think people will travel, but will they travel by air? It all depends on how much airfares go up.

MUNTEAN: Pete Muntean, CNN, Washington.



AZUZ (voice-over): Ten-second trivia:

Which of these U.S. government laws was passed in 1913?

The Federal Reserve Act, the Hatch Act, the Social Security Act, or the Equal Pay Act?

The Federal Reserve Act is the oldest of these laws. It established the Federal Reserve system.


AZUZ: Airline tickets are part of a vast assortment of goods and services that have gotten significantly more expensive over the past year.

Inflation, that rise in prices, is at its highest rate since 1982.

Many of the things we bought last month were almost eight percent more expensive on average than they were in February 2021. That's according to the U.S. Labor Department. The Federal Reserve is America's Central Bank. It has some actions it can take to try to lower inflation and one of those involves raising interest rates.

If those go up, people and businesses have to pay back more on the money they borrow, but that can also reduce demand for large purchases like houses and if demand decreases, prices and inflation can sink back down to more reasonable levels. For the first time since 2018, the Fed has raised interest rates and its chairman said it had to act because U.S. economic conditions weren't getting better on their own.


CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: The era of cheap money is over. As the Federal Reserve starts raising interest rates to fight inflation, you might be wondering what those higher rates mean for you. In short, higher borrowing costs. Expect higher rates on car loans, credit cards, student debt and mortgages.

The 30-year fixed-rate mortgage has already climbed almost 4 percent. Now, that's still historically cheap, but it's a sharp jump from recent lows.

Higher rates will hit the stock market too. Zero percent interest rates have forced investors into riskier assets like stocks. Now, the stock market will face more competition from more boring investments by government bonds. And more expensive business loans can cause companies to pause on investments and hiring.

So, will rate hikes be good for savers then? Not so fast, money stashed in savings and CDs has earned almost nothing for the past couple of years.

Savers will in theory start to earn interest again. But in practice, it could take a while to play out. Those interest rates will still be very low, well below inflation.


AZUZ: There's all kinds of work going on in the French capital. Yesterday, we told you about reconstruction of the Notre Dame Cathedral. Today, we're explaining how the Eiffel Tower just got taller.

Until this week, the Parisian landmark measured around 1,063 feet from the base to the tippet top. Now, it stands at 1,083 feet and a new antenna is the reason why.

The tower was originally built for a world's fair in 1889. It's a wrought iron feat of engineering that also commemorated the hundred-year anniversary of the French Revolution.

And while it got plenty of criticism at first with a number of artists and writers calling it an eyesore, La Tour Eiffel withstood that to become one of the most famous landmarks on the planet.

Over the past century, the tower has been used for radio broadcasts and science experiments. The digital audio antenna that was installed on Tuesday is one of several that have been attached to the top of the tower. So, it's not the first one that has changed Eiffel's height.


AZUZ: Could your clothes be listening?

Researchers at MIT say they've devised a fabric that can act as a microphone. It's a flexible fiber that can be woven into clothing they say it can sense sounds in the direction they're coming from and then convert those vibrations into electrical signals. Besides detecting when you're about to burp, professors say this could be used to monitor a baby's heartbeat or let you talk on the phone through your shirt.

Lend me your ears, the thought of sounds more than skin deep could make some people tympanic, going insane in the membrane. But could it give you good vibes. In a tent, it could help you keep an ear to the ground. In a flight suit, it could help pilots listen up. And in fishing gear, it could help keep people hooked on microphonics.

So, I guess it all comes down to whatever you think sounds good.

I'm Carl Azuz and I hear that South High School is watching today from Denver, Colorado.

Have a great weekend y'all.