Southwest Airlines arranged the shipment of approximately 12.6 million gallons of jet fuel by ship from Houston to Los Angeles in May, with the vessel arriving May 28 after transiting the Panama Canal. The move represented the first time the Dallas-based carrier had employed this logistics method and came during a period of elevated prices and constrained supply on the West Coast, which relies more heavily on fuel imports than other U.S. regions.
Jet fuel prices have been volatile since February when the U.S. and Israel struck Iran, creating significant cost pressures for the industry. President Donald Trump issued a waiver of the Jones Act in March to facilitate the shipment, suspending a 1920 law that typically requires cargo between U.S. ports to move on American-flagged vessels. Supply concerns intensified as countries implemented export restrictions, though Southwest indicated such worries have since moderated.
The financial impact on Southwest has been substantial, with fuel expenses rising nearly $900 million in the second quarter compared to the prior year. For context, the carrier consumed 564 million gallons of jet fuel in the previous quarter, making the imported shipment equivalent to approximately one week’s supply during the period of greatest scarcity. Jet fuel represents airlines’ largest expense category after labor costs.
Other carriers have also grappled with fuel price volatility. United Airlines, which operates the most extensive international network among U.S. carriers, reported that a single quarter saw jet fuel costs increase by $575 million. Airlines have largely abandoned fuel hedging strategies developed during years of domestic supply abundance, and carriers are instead scaling back capacity expansion while maintaining higher ticket prices that remain attractive to passengers despite increased fares.
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