Why Soaring Jet Fuel Costs Are Forcing Airlines to Abandon Full Planes
BALTIMORE, October 27, 2026 — Major U.S. carriers are increasingly willing to fly with empty seats rather than slash fares simply to fill them, betting that disciplined pricing will protect profits at a time of soaring fuel costs.
The strategy has delivered substantial revenue gains as demand has held up despite sharp fare increases. Yet profits have still been squeezed as jet fuel prices surged roughly 90% since the US-Israeli war on Iran began in February, forcing several major carriers to cut earnings forecasts.
A New Economic Reality for Carriers
Executives at Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group have emphasized protecting margins over boosting passenger volumes. Their resolve faces a test in 2027 as industry schedules point to more flying capacity, potentially intensifying competition for passengers even as fuel prices are expected to stay high.
If fuel stays elevated, we have to continue to push yield up so that we can make a bit of money, American Chief Financial Officer Devon May told Reuters on Thursday. Yield is the revenue airlines collect for each mile passengers fly, and by the numbers, it has become the single most important metric for survival in the current climate.
The Cost of Fuel Reaches Record Highs
The average price of jet fuel in the U.S. reached a record $4.90 per gallon on October 22, 2026, according to the tracking firm Argus. That is the highest single-day average the firm has ever recorded and more than twice what the price was a year ago.
Airfares for Thanksgiving are up about 30% compared to last year, while tickets for the Christmas holiday are up more than 20%. Airlines have long balanced fares against how full their planes are, but elevated fuel costs have made executives more willing to sacrifice occupancy and avoid discounts.
Revenue Growth Masks Occupancy Decline
United’s commercial chief Andrew Nocella offered an example during Wednesday’s earnings call. Its leisure load factor, a measure of how many available seats are occupied, fell 1.3 percentage points in the third quarter.
Nocella acknowledged that the decline showed a small amount of elasticity given higher ticket prices, but called it a trade we would make every day. American Airlines planes flew less full in the third quarter even as passenger yields jumped more than 18%.
Looking Ahead to Capacity and Global Trends
Delta has also been managing the business for margins, CEO Ed Bastian said. Across Delta, United, American, Southwest and Alaska, passenger revenue rose nearly $8.8 billion, or 18%, in the third quarter from a year earlier.
Some in the industry think fares will go even higher next year. Michael O’Leary, CEO of the European low-cost carrier Ryanair, noted that airfares could rise 10 to 20% in Europe over the next 12 months. The picture may be slightly better in the U.S., which has more oil-producing and refining capacity than Europe.
The airlines themselves are eating most of that cost, Chris Sununu, the head of Airlines for America, a trade group representing the big airlines, said in an interview this week with CNBC. And some of it unfortunately has to be passed on to the customer and so you see that 20 to 30 percent increase as we go into the holidays.
Ryanair’s Forecast of Steeper Fares Ahead
While U.S. carriers have absorbed a significant portion of the jet fuel cost surge, industry leadership anticipates that ticket prices will continue climbing in the near term. Michael O’Leary, chief executive of the European low-cost carrier Ryanair, stated this week in Belgium that airfares could rise between 10 and 20 percent in Europe over the next 12 months. O’Leary characterized this potential increase as “the biggest increase in airfares, I would say, in history in Europe in the next 12 months.” The NPR report notes that the picture may be slightly better in the United States, which possesses more oil-producing and refining capacity than Europe, yet higher fuel costs are still hurting U.S. carriers. Chris Sununu, head of Airlines for America, a trade group representing major U.S. airlines, told CNBC that airlines are eating most of the jet fuel cost burden, but “some of it unfortunately has to be passed on to the customer,” resulting in the 20 to 30 percent increases observed heading into the holiday season. With demand remaining sticky despite the price hikes, as Delta Air Lines CEO Ed Bastian noted regarding travelers’ limited resistance to current fares, the trajectory of airfares remains closely tied to the sustained elevation of jet fuel prices.
Despite the record-breaking surge in jet fuel prices—reaching $4.90 per gallon on October 22, 2026, according to Argus, the highest single-day average the firm has ever recorded and more than double the price from a year ago—airlines are structuring their operations around sustained high costs. The NPR source confirms that airfares for Thanksgiving are up about 30 percent compared to last year, and Christmas holiday tickets are up more than 20 percent. While travelers appear willing to pay premium prices for essential holiday trips, the source indicates that consumers are shopping around more in search of deals. As major carriers including Delta, United, American, Southwest, and Alaska have emphasized protecting margins over boosting passenger volumes, the industry braces for a period where elevated fuel costs continue to reshape the relationship between ticket prices and flight occupancy.
Sources
- Low-cost carrier
- U.S. airlines favor higher fares over fuller planes as fuel costs squeeze profits
- Jet fuel prices hit a record and holiday airfares soar higher
Photo: Andrey Babin (GFDL)
