Transportation services inflation rose 7.9% in May year over year, led by a 37.8% jump in airline fares, Labor Department statistics released Friday show.

Airlines are passing on rising oil prices to passengers through higher fares relatively quickly, but the spike in energy costs will worsen the industry's overall outlook in 2022, according to the head of the International Air Transport Association (IATA).

Uneven Recovery for Airlines

IATA said global passenger traffic rebounded in February as the impact of the omicron variant retreated outside Asia. The war in Ukraine has yet to feed through into monthly data. Airlines are grappling with a rise in oil prices, which accelerated after Russia's invasion of Ukraine.

The rise has worsened an outlook already expected to include an industry-wide loss in 2022, although some airlines will make a profit as the world stages an uneven recovery, Walsh said.

In the past, the rule of thumb was that oil prices would take six months to feed through to airfares, he added.

Fares Rising Faster in 2022

This year, that could happen more quickly because of the market's dramatic volatility as well as lower-than-usual levels of forward bookings already in the system following the pandemic.

Walsh also said airlines and airports were moving to tackle staff shortages after a spike in demand, but some factors were outside their control.

Thousands of holidaymakers have seen getaways disrupted or canceled because airlines and airports do not have enough staff to meet the recovery in demand as pandemic restrictions are eased in Europe.

"The challenge the industry faces is bringing back front-line staff where they require background security checks," Walsh said, adding that a process which used to take five to six weeks is taking "much longer now."

In early May, Walsh was more optimistic about U.S. summer travel and prospects for the airline industry in 2022 into next year, when he said that the recovery in passenger traffic was accelerating and that on average, the industry could now return to prepandemic figures in 2023, a year earlier than its previous forecast.

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