High Airfares Likely to Persist Even as Fuel Prices Decline

Travelers may continue to face elevated airfares, even if jet fuel prices decrease, according to major U.S. airlines and industry analysts. The volatility in fuel costs, which rose sharply after the onset of the Iran war and has seen subsequent fluctuations, makes it difficult for airlines to commit to lower ticket prices.

Jet fuel prices have not only tracked crude oil prices but have also been affected by tight supplies of the refined product, a significant operating expense for airlines. In response to rising costs, carriers have reduced less profitable flights and increased fares and baggage fees. However, these measures have only partially offset the soaring fuel expenses for many major U.S. carriers.

The correlation between fuel prices and airfares is not always direct. Airlines typically set flight schedules and ticket prices several months in advance, based on anticipated fuel costs and other operational expenses. Tickets are often sold even earlier. While the price of seats on a given flight can change multiple times, airlines cannot retroactively increase fares for seats already purchased if fuel prices spike unexpectedly.

"It’s not just the level of fuel costs that is a problem or a challenge for airlines," said Brett House, an economist at Columbia Business School. "It’s also the volatility."

Signs of relief for travelers remain scarce as airlines adjust their pricing and schedules for the remainder of the year. In August, U.S. airfares were 23% higher than the previous year. Jet fuel prices continued to climb in September, reaching $4.53 a gallon on Sept. 17, according to the Argus U.S. Jet Fuel Index. This price was nearly double the 2025 average.

Travel booking company Hopper reported that domestic round-trip fares for Thanksgiving and Christmas travel were approximately 31% and 23% higher than last year, respectively. These figures are based on fares available in flight searches during the week prior to their report.

The pressure on airlines and travelers is a global issue. Jet fuel prices worldwide more than doubled from around $99 a barrel in late February to $209 by early April, before falling and then reaching $195 a barrel in mid-September. These price increases are linked to disruptions affecting diesel fuel as well, including reduced refinery production and fuel exports from the Middle East, as well as damage to Russian refineries.

The International Air Transport Association (IATA) expects fuel to account for nearly one-third of airline operating expenses this year, an increase from about a quarter in 2025.

Airlines like United have already sold a significant portion of tickets for the latter part of the year, making retroactive fare increases impossible. Chief Financial Officer Mike Leskinen stated that while the airline expects to recover higher fuel costs through revenue, it will not be immediate. Leskinen emphasized the need for fuel prices to stabilize rather than just remain high.

This lag in cost recovery means travelers might continue to pay for past fuel price spikes even if prices fall. Experts suggest that airfares will only see a sustained decline if jet fuel prices decrease and remain stable over a period.

The rapid increase in jet fuel prices has complicated airline forecasts. For instance, JetBlue had to adjust its expected average fuel price for the third quarter upward. American Airlines noted that every penny increase per gallon of jet fuel adds approximately $10 million to its quarterly fuel bill, with recent increases projected to raise fourth-quarter fuel costs by about $1 billion.

American, United, and Southwest Airlines are further pruning their flight schedules, particularly on less profitable routes, due to escalating fuel costs. United has canceled some December flights and indicated potential further reductions in 2027 if fuel prices remain high. American Airlines anticipates slower growth next year than previously projected.

Last-minute travelers are experiencing the most significant price hikes. The average one-way domestic fare for Allegiant Air booked on the same day of travel increased by 21% in one week to $280, while a comparable American Airlines fare rose 6% to $463.

"The likelihood that fuel surcharges are going to be rolled back and airfares are going to be brought down is very low over the next few months," House concluded.