US Airfares Hit 10-Year Highs Amid Soaring Fuel Costs
Major US airlines are raising ticket prices and reducing capacity to offset record jet fuel costs driven by conflict in Iran.
Holiday airfares in the United States have reached 10-year highs as carriers raise prices to offset record-breaking jet fuel costs. Driven by an eight-month war in Iran, jet fuel prices rose approximately 90% since February, hitting a single-day average of $4.90 per gallon. Consequently, Thanksgiving fares have surged by as much as 40% and Christmas tickets by more than 20% compared to last year.
United Airlines and other major carriers are prioritizing profit margins and ticket yields over passenger volume. This strategy has led to the first annual decline in U.S. airport checkpoint screenings since 2020, with September fares rising more than 22% year-on-year. While passenger revenue for the five largest carriers rose nearly $8.8 billion in the third quarter, profits remain squeezed. Delta Air Lines and Southwest Airlines have cut earnings forecasts, and American Airlines Group expects a full-year loss.
Industry executives indicate that fares will likely remain elevated even if oil prices decline, citing the need to recover real-term ticket prices that lagged since the pandemic and to cover rising labor and airport rent costs. The industry is also shifting away from low-cost models toward premium seating, a transition accelerated by the May collapse of Spirit Airlines. To maintain pricing power, some carriers are slowing network growth and reducing capacity heading into 2027.
