Airlines Warn of Higher Fares as Jet Fuel Costs Double

Jet fuel costs have surged from just over $2 to approximately $4 per gallon, driven by airspace disruptions in the Middle East related to the conflict with Iran. Unlike in the past, most US carriers no longer meaningfully hedge fuel prices, leaving them exposed to these spikes. The impact is significant: a one-cent-per-gallon increase costs Southwest $22 million, Delta $40 million, and American $50 million annually. United CEO Scott Kirby indicated that airfare increases will likely begin quickly to offset these costs. This rise in fuel expenses threatens to wipe out profits for carriers like United, which had $11 billion in fuel expenses against $3 billion in net profit in 2025. While airlines typically price tickets based on demand rather than cost, sustained high fuel prices may lead to broader fare hikes as disposable income drops. This represents a major operational and financial challenge for the industry since the pandemic