Gasoline prices are displayed at a Shell gas station as a plane approaches San Diego International Airport in California, April 24, 2026. Kevin Carter | Getty ImagesVolatile fuel prices and resilient travel demand threaten to keep airfares high this year. It will be more difficult to make profits for airlines. The Iran war that began in late February sent fuel prices to multi-year, if not record, highs, including for diesel, gasoline and jet fuel, airlines’ biggest expense after labor. Supply problems with Strait of Hormuz disruptions that lasted most of this year and high demand have driven up prices for jet fuel and other distillate products more than crude oil. Airline executives don’t expect much relief in fuel costs anytime soon, nor a drop in travel demand. “You can’t run the business on the hope that the Strait of Hormuz will open at a certain time,” Qantas Airways CEO Vanessa Hudson told CNBC in an interview late last month. The Australian airline operates some of the longest flights in the world and is planning even longer flights next year and 2028, starting routes between London and Sydney and New York and Sydney. “There is a resilient demand backdrop in this environment. We are making sure we have our capacity configuration right,” he said. The U.S.’s on-again, off-again truce talks with Iran since the spring have kept fuel prices volatile, but airlines are holding on to those fare increases as customers continue to book. Airlines have also been quick to add more luxurious seats on board to capitalize on demand for more expensive and spacious offerings, sometimes reducing the number of standard economy seats to do so. Security checkpoints at U.S. airports decreased 1% this year through Sept. 20 compared to the same period in 2025, according to a Sept. 23 note from Bernstein. Still, the latest U.S. inflation reading showed airfares rose 23.4% in August from a year earlier. Holiday travel could increase even more. As of Sept. 24, fare-tracking platform Hopper said domestic round-trip tickets were $402 during Thanksgiving, up 31% from last year. Meanwhile, holiday fares in the United States have increased by 23%, to $452 for a round trip. Those holiday visits are essential for many families, said Hopper economist Hayley Berg, so many travelers may not like the rate but book it anyway. Berg said many customers have booked their Thanksgiving and Christmas flights earlier than usual. While demand for business travel has been strong in recent months and off-peak travel is no longer a secret to savvy travelers, customers’ focus on those key holiday trips this year could mean there are deals to be had in the interim, Berg said. “To me, that indicates that they’re already thinking about holiday travel and not any of those filler trips, fall shoulder season trips,” he said. Profit forecast weakens Carriers forecast double-digit revenue growth for the third quarter as customers spend more. That’s even with a little less people flying. “Never in my career have I seen, outside of the recovery after maybe the pandemic or 9/11… a revenue environment in terms of improving year over year,” American Airlines CEO Robert Isom said at a Morgan Stanley investor conference last month. The airline has been revamping its cabins to add more premium seats and other changes to catch up with its rivals. But despite the higher tariffs, Wall Street analysts have lowered their profit estimates for U.S. airlines since another surge in jet fuel in the summer. American said in July that it expects to lose between 10 and 70 cents per share, on an adjusted basis, for the third quarter and cut its profit outlook for 2026. Travelers at San Francisco International Airport in California, May 22. 2026.David Paul Morris | Bloomberg | Getty Images Investors and anyone looking to buy a plane ticket in the coming months will get an updated look at what’s to come when airline earnings season begins Friday with Delta Air Lines. The most profitable US airline, which will also benefit from its own refinery, will report third quarter results and give a new outlook for the end of the year. Wall Street’s focus will be on the fourth quarter and beyond. Airlines are likely to lower their profit outlook for that quarter, said Savanthi Syth, an airline analyst at Raymond James. He said airlines aren’t likely to make that many fare increases now, but if jet fuel stays in the $4 to $4.50 per gallon range, they will likely cut more flights, which may end up raising fares and customers will have fewer seats to choose from. “We will see further rationalization in capacity,” he said. The costs keep airlines cautious. Airlines have cut some of their schedules to eliminate unprofitable or underperforming routes. In addition to fewer routes, the collapse of low-cost carrier Spirit Airlines in May eliminated between 1% and 2% of capacity from the US market, according to Barclays, meaning both low-cost and full-service airlines have enjoyed more pricing power this year. “Higher booked fares should result in similar fourth-quarter unit revenue trends for most airlines, but elevated domestic capacity growth at American and United (+10% and +9% in current schedules) will likely be the guidance most closely watched by investors,” Barclays airline analyst Brandon Oglenski said in a Sept. 28 note. Planning assumptions for 2027.”
