American Airlines Warns of Stubbornly High Ticket Prices Despite Falling Fuel Costs

Passengers hoping for cheaper flights when fuel costs inevitably decline may face disappointment, as American Airlines suggests ticket prices could remain elevated. The airline's chief financial officer, Devon May, indicated that fares are unlikely to fall significantly even if jet fuel prices ease, as carriers aim to stabilize their finances.

'If fuel comes down, I think airfares probably stay largely where they're at right now,' May told the Financial Times. He added that rising fuel prices necessitate higher fares to offset increased operating expenses.

This warning comes as travelers are already experiencing a surge in ticket prices, partly driven by rising jet fuel costs. Since late February, jet fuel prices have more than doubled, placing airlines under considerable pressure to manage escalating operational expenditures.

American Airlines reported a 19 percent increase in third-quarter revenue compared to the previous year, its strongest performance outside the immediate post-pandemic period. However, this revenue growth was insufficient to counteract a 67.5 percent year-over-year jump in fuel bills, which amounted to an additional $1.9 billion in expenses for the quarter, based on an average price of $3.85 per gallon.

The airline anticipates further cost increases, with fuel expected to average around $4.70 per gallon in the fourth quarter, nearly double the price from the same period in 2025. This projected rise could add another $2.8 billion to year-over-year fuel expenses.

Consequently, American has revised its financial outlook downwards, now forecasting an adjusted loss between $1 and $1.60 per share for 2026, a shift from its previous July forecast which ranged from a loss of 65 cents per share to a profit of 65 cents.

May explained that airlines have only recently begun to adjust fares to levels that account for inflation and pandemic-era disruptions. He noted that ideally, ticket prices should have increased in 2024, but an oversupply of flights at the time hindered carriers' ability to raise fares. 'This was the first year that everything came together in a way that we were able to push yields back up to where they were seven years ago in real terms,' he stated.

American is not alone in facing these financial pressures. Delta Air Lines also reduced its profit outlook despite a 16 percent annual increase in third-quarter revenue. United Airlines reported a $1.8 billion impact from higher fuel costs, though it recovered 72 percent of this amount through increased ticket prices.

Despite the rising costs, demand for air travel has remained resilient. Delta reportedly increased fares by approximately 20 percent without a significant drop in sales, suggesting a willingness among passengers to pay more. Premium cabin sales and other ancillary services also contribute to airline revenue.

United's chief commercial officer, Andrew Nocella, mentioned that consumers and businesses have accepted price increases, partly because airfares had lagged behind inflation and other travel expenses for years. However, there are some indications of pushback from leisure travelers, with United noting a 1.3 percent decrease in leisure seat occupancy during the third quarter.

American plans to slow its network growth in 2027 compared to the current year due to the sustained impact of elevated fuel costs. With demand holding steady and airlines focused on recouping expenses, a decrease in fuel prices may not translate to lower airfares for consumers.

International carriers have also signaled further price increases, with Ryanair's CEO Michael O'Leary predicting fares could rise by as much as 20 percent next summer. Aviation economist Dan Akins suggested that major U.S. airlines are capitalizing on limited competition and financial challenges faced by budget carriers.