Cheap Flights Aren't Coming Back Soon, Even if Jet Fuel Falls

U.S. airfares in August ran 23% higher than a year earlier, according to the Labor Department — and airlines say ticket prices are likely to stay high even if jet fuel costs retreat.

The reason is timing and volatility, not just the level of fuel prices. Jet fuel, one of airlines' largest operating expenses, surged after the Iran war began, retreated sharply in the spring, then climbed again through the summer. Those swings make it harder for carriers to plan and give them reason to be cautious about cutting fares, according to Brett House, an economist who teaches at Columbia Business School.

"It's not just the level of fuel costs that is a problem or a challenge for airlines," House said. "It's also the volatility."

The numbers show the disconnect. 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, yet average fares stayed elevated. The average fare, excluding optional fees such as checked bags and seat selection, climbed from $405 in the last three months of 2025 to $428 in the first quarter and to $436 in the April-June period, according to the Bureau of Transportation Statistics.

Jet fuel has risen faster than oil during the war, reflecting both higher crude prices and tight supplies of the refined product. Carriers responded by cutting less profitable flights and raising fares and baggage fees, but major U.S. airlines said higher passenger revenue initially covered only part of their soaring fuel costs.

Airlines set schedules and seat counts months in advance, factoring in expected fuel costs, and begin selling tickets even earlier, House explained. They cannot charge more for seats already sold when fuel spikes.

No relief in sight

Relief remains scarce. Jet fuel reached $4.53 a gallon on Sept. 17, according to the Argus index. At $4.30 a gallon on Friday, the average across the four U.S. markets the index tracks remained nearly twice the 2025 average.

Travel-booking company Hopper, in a report published the same day, said travelers shopping for holiday flights already face the highest airfares in a decade. During the previous week, a round-trip domestic fare averaged $402 for Thanksgiving travel and $452 for Christmas — up 31% and 23% respectively from last year.

The pressure extends beyond the United States. Globally, jet fuel averaged about $99 a barrel on Feb. 27, the day before the war began, according to the International Air Transport Association's Jet Fuel Price Monitor. Prices more than doubled to $209 by early April, fell for nearly three months and reached $195 a barrel in mid-September, IATA said, citing data from S&P Global Energy Platts.

The refined-fuel squeeze stems from the same disruptions driving diesel prices higher. Fighting has curtailed refinery production and fuel exports from the Middle East, while Ukrainian strikes have damaged Russian refineries. Because diesel and jet fuel compete for refinery output, shortages of one pressure the other. IATA expects fuel to account for nearly one-third of airline operating expenses this year, up from about a quarter in 2025.

Carriers adjust schedules — and count costs

About 35% of United's tickets for the final three months of the year were already booked by the time fuel prices jumped again, and the airline could not raise those fares retroactively, Chief Financial Officer Mike Leskinen said. He expects United to recover its higher fuel costs through revenue, but not immediately.

"I don't actually care if it stays high. I just need it to stabilize," Leskinen said of jet fuel prices at a Sept. 16 investor conference.

JetBlue, as recently as Sept. 10, raised its expected average fuel price for the July-September period to $3.96 a gallon — a forecast the market outran within a week, with the Argus index at $4.53 and holding above $4.25 with days left in the quarter.

The stakes are quantifiable. Every penny per gallon adds about $10 million to American Airlines' quarterly fuel bill, Chief Financial Officer Devon May said. The latest increases will boost American's fourth-quarter fuel costs by about $1 billion, May told the same investor conference.

American, United and Southwest Airlines said they are pruning schedules further, particularly on less-profitable routes. United pulled some December flights and warned of further cuts in 2027 if fuel stays expensive. American said it expects to grow more slowly next year than it anticipated a few months ago.

Last-minute buyers are already paying for it. 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. The comparable same-day American Airlines fare was $463, up 6%.

For airfares to fall on a sustained basis, jet fuel prices need to fall and stay down, said Stephen Treanor, a finance professor at California State University, Chico, who has studied airlines' exposure to fuel price risk. House put a finer point on it: "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."