U.S. airlines are hiking fares — and travelers keep booking
A United Airlines plane taxis at Los Angeles International Airport on April 21, 2026 in Los Angeles, California.
Justin Sullivan | Getty Images
Jet fuel prices have risen this year since attacks on Iran that began two months ago led to the virtual closure of the Strait of Hormuz. For now, airline executives say passengers are still flying and the bill is increasingly being covered.
The price increase comes just before spring break and is eating into the airline’s profits this year. But booking trends show resilient consumers are prioritizing travel, and executives have a bright outlook for the peak summer months when demand ends in August. There are still questions about how demand will hold up towards the end of the year, as travelers don’t tend to book that far in advance.
According to Airlines Reporting Corp., travel agency ticket sales in March rose 12% from a year earlier to $10.4 billion, while the number of domestic trips increased 5% and the number of international trips increased 1%.
According to ARC data published on April 16, domestic economy ticket prices increased by 21% compared to the previous year, to an average of $570, while premium seat prices increased by 17% to an average of $1,444 per trip.
Despite the higher fares, “it’s an encouraging sign that bookings have remained resilient despite these changes.” JetBlue Airlines CEO Joanna Geraghty on the earnings call Tuesday.
Expectations of airline companies
US airlines reported that the Iran war has caused more than $6 billion in additional costs this year, adding to their costs.
But JetBlue and major carriers told Wall Street this month that they expect customers to absorb higher jet fuel costs by early 2027, if not by the end of this year. Carriers have reduced capacity to cut costs, which could increase airfares.
American Airlines It said Thursday it expects a 13.5% to 16.5% increase in revenue in the second quarter.
“We have always been very careful about managing our load factors, and we see our loads keeping pace with capacity increases,” American CEO Robert Isom said in an earnings call. “This shows that we are seeing real benefit in returns now.”
Delta Airlines And United AirlinesAirlines, which account for the majority of the U.S. industry’s profits, are also optimistic about wage growth; especially as airlines are more reliant on growth in seats like first class or premium economy, which can cost thousands of dollars more than economy class options.
Low-cost, domestic-focused airlines with fewer premium options have struggled. Including budget carriers represented by the Value Airlines Association Border Airlines Avelo Airlines is seeking $2.5 billion in aid from the Trump administration to help cover the increase in fuel prices, the group said Monday.
Border It will brief Wall Street analysts next week on its outlook for this year and is likely to face questions about its ability to recapture costs with lower average wages than its major rivals.
Even if oil prices fall, that won’t mean an immediate relief for jet fuel prices because that product includes refining and transportation costs that take longer to come to fruition.
“It is possible that fares will remain high, especially given that airfares have increased well below overall inflation since COVID,” UBS airline analyst Atul Maheswari wrote on Monday. “Therefore, we think there is room for airfares to rise and remain higher. This could lead to a significant increase in earnings and margin expansion for airlines in 2027 if jet fuel prices moderate. However, we think demand should remain stable for airlines to maintain pricing next year.”
