Jet fuel tops $4 per gallon as airlines raise fares worldwide

Wednesday 25 - 18:05

By: Dakir Madiha

Jet fuel tops $4 per gallon as airlines raise fares worldwide

Jet fuel prices have more than doubled since the US-Israeli war against Iran began late February. They surpassed $4 per gallon this week, per Airlines for America data. Airlines globally pass costs to travelers amid peak spring break and rising summer bookings.

United Airlines CEO Scott Kirby warned employees on March 20 of the hit. Fuel costs doubled in three weeks, potentially adding $11 billion in annual expenses. That exceeds United's record yearly profit under $5 billion. Booked fares rose 15-20% last week; United braces for $175 oil and no drop below $100 until late 2027. It will cut short-term capacity 5% on off-peak routes unable to cover fuel.

Delta CEO Ed Bastian said mid-March losses topped $400 million extra on fuel. American Airlines leaders echoed similar figures at the J.P. Morgan Industrials conference.

Impacts spread beyond the US. A Vietnam Civil Aviation Authority survey found over 60% of global carriers added fuel surcharges or base fare hikes since mid-March. Air France-KLM raised long-haul economy roundtrips by about $57. Thai Airways hiked tickets up to 15%; Malaysia Airlines, All Nippon Airways, and China Southern added $5 to over $380 per ticket by route and class.

IATA Director General Willie Walsh forecasted industry fares up to 9%, with fuel at a quarter of operating costs. Argus US Jet Fuel Index jumped from $2.50 pre-war to $3.99 in two weeks, climbing since.

Demand holds firm despite shocks. United saw its top 10 booking weeks ever in the last 10. Experts urge locking summer fares now; low-cost carriers suffer most. Spirit Airlines domestic one-ways doubled in a week; Allegiant and JetBlue saw sharp jumps, per Deutsche Bank data via Wall Street Journal.

Uncertainty lingers on duration. Even if war ends today, supply chains take time to untangle, said Alex Jacquez of Groundwork Collaborative.