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U.S. airfares remain elevated even as jet fuel prices fluctuate, with airlines saying they need prices to stabilize before lowering ticket prices.
U.S. airfares are likely to remain high even if jet fuel prices fall, because airlines need fuel costs to stabilize before they can lower ticket prices on a sustained basis.
Jet fuel prices have been unusually volatile, rising faster than oil during the war, reflecting both higher crude prices and tight supplies of the refined fuel that is one of airlines' largest operating expenses. Airlines have raised fares and baggage fees, although major U.S. airlines said higher passenger revenue initially covered only part of their soaring fuel costs. Airfares have not moved in lockstep with fuel prices, however.
Airfares Remain Elevated Despite Falling Fuel Costs
The Argus U.S. Jet Fuel Index plunged from an early April peak of $4.88 a gallon to a wartime low of $2.70 in June, but average fares remained elevated. The average fare, not including optional fees for services such as checked bags and seat selection, rose from $405 in the last three months of 2025 to $428 in the first quarter of this year and to $436 in the April-June period, according to the Bureau of Transportation Statistics.
Part of the disconnect between fuel prices and airfares comes down to timing, said Brett House, an economist who teaches at Columbia Business School. Airlines typically decide several months in advance how many flights to operate and seats to offer, factoring in expected fuel costs and other expenses. They begin selling tickets even earlier. While prices for seats on the same flight can change repeatedly, airlines cannot charge more for seats already sold if fuel prices suddenly spike, he explained.
Such fluctuations make it harder for airlines to plan ahead and give them a reason to be cautious about lowering ticket prices. It is not just the level of fuel costs that is a problem or a challenge for airlines, House said. It is also the volatility. There are few signs of relief so far for travelers as airlines adjust their schedules and prices for the remainder of the year.
Holiday Flight Prices Hit Decade Highs
In August, U.S. airfares were 23% higher than a year earlier, according to the Labor Department. Jet fuel prices kept climbing this month, reaching $4.53 a gallon on Sept. 17, according to the Argus index. At $4.30 a gallon on Friday, the average price across the four U.S. markets the index tracks remained nearly twice the 2025 average.
Travelers shopping for holiday flights already are encountering the highest airfares in a decade, travel-booking company Hopper said in a report published the same day. The company, which tracks fares available in flight searches, estimated that during the previous week, a round-trip domestic fare averaged $402 for Thanksgiving travel and $452 for Christmas, 31% and 23% more than last year.
Jet fuel prices more than doubled to $209 by early April, fell for nearly three months and reached $195 a barrel in mid-September following their renewed ascent, according to the International Air Transport Association's Jet Fuel Price Monitor, citing data from S&P Global Energy Platts. Fuel exports from the Middle East and Ukrainian strikes that have damaged Russian refineries have contributed to the volatility.
Because diesel and jet fuel are closely related products that compete for refinery output, shortages of one can put additional pressure on the price and availability of the other. IATA expects fuel to account for nearly one-third of airline operating expenses this year, up from about a quarter in 2025.
United CFO Cites Fuel Volatility as Key Challenge
By the time fuel prices jumped again, about 35% of United's tickets for the final three months of the year were already booked and the airline could not increase those fares retroactively, Chief Financial Officer Mike Leskinen said. Speaking about the rising price of jet fuel at a Sept. 16 investor conference, Leskinen said, I don't actually care if it stays high. I just need it to stabilize.
The speed with which jet fuel prices rose recently has complicated the forecasts of U.S. airlines. As recently as Sept. 10, JetBlue raised its expected average fuel price for the July-September period to $3.96 a gallon. Prices continued climbing afterward, with the Argus U.S. Jet Fuel Index reaching $4.53 a gallon a week later and remaining above $4.25 with just days left in the quarter.
Every penny per gallon adds about $10 million to American Airlines' quarterly fuel bill, Chief Financial Officer Devon May said. Speaking at the same investor conference this month, May said the latest increases would boost the airline's fourth-quarter fuel costs by about $1 billion. Airlines are preparing for a fuel spike even as prices come down.
Sustained Fare Drops Require Stable Low Fuel Prices
Jet fuel prices need to fall and stay down for airfares to decline on a sustained basis, said Stephen Treanor, a finance professor at California State University, Chico, who has studied airlines' exposure to fuel price risk. Airlines may also cut flights further, particularly on less-profitable routes, due to higher fuel costs. United, for example, pulled some December flights and warned of further cuts in 2027 if fuel remains expensive.
American said it expected to grow more slowly next year than it anticipated a few months ago. Travelers who buy tickets at the last minute are paying a price. The average same-day fare for a one-way domestic Allegiant Air flight jumped 21% in a week, to $280 on Sept. 18, according to a Deutsche Bank analysis of flight pricing. The comparable price for a same-day American Airlines fare was $463, up 6%.
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 said.
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CTVNews:This story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
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