Fuel refinery Delta bought is expected to save airline $300M this quarter as jet fuel prices jump 105%

Delta Air Lines expects a $300 million boost from its Pennsylvania oil refinery this quarter as jet fuel prices surge globally, giving the carrier a significant advantage over competitors scrambling to manage soaring costs.

The Atlanta-based airline owns a refinery in Pennsylvania that is helping it cut fuel costs while rivals face jet fuel price increases as high as 105%, according to Clint Henderson, managing editor of The Points Guy.

"When Delta bought that refinery, there was a lot of head scratching, but now they look like geniuses," Henderson said.

The refinery gives Delta an edge as airlines industrywide raise fares and add fuel surcharges in response to climbing fuel prices. Unlike past fuel spikes, airlines are passing costs to consumers immediately rather than gradually, Henderson said.

"In a normal market, fuel surcharges and the price increase from jet fuel gets passed on to consumers very slowly. Not this time," Henderson said.

Average summer airfares are up between 10% and 20%, depending on the destination. Some airlines are also cutting capacity. United announced it is cutting 5% of its flights, meaning fewer options and higher prices for travelers.

"We're already seeing U.S. carriers scale back some of their flights, especially on less profitable routes," Henderson said.

The surge in fuel costs is hitting airlines' bottom lines hard, Henderson said.

"That is really devastating to airlines' bottom lines. And so you're starting to see this across the board, both in fare increases and things like fuel surcharges. So it's really bad news for consumers, unfortunately," he said.

For travelers looking to save money, booking now is the best strategy, Henderson said.

"Our advice at The Points Guy is to book all your travel for the rest of the year right now," he said.

Travelers who do not book Basic Economy tickets can monitor prices and get a trip credit for the price difference if fares drop, Henderson said.

Date and destination flexibility will also lead to better deals, he said. Henderson also recommended using points and miles now rather than letting them sit idle.

"Now is the perfect time to use them. When cash prices are high, they only get less valuable over time," he said.