US domestic airfares have risen substantially, with prices up 26.5% compared to the prior year according to June consumer price index data, while global airfares have increased 25-30% relative to 2025. Jet fuel costs, which represent the largest controllable operating expense for airlines at 30-35% of costs, have more than doubled since the start of the year, trading around $149 per barrel as of early August compared to $90 at year’s start. The surge reflects a combination of factors including heightened demand for travel and reduced global refining capacity triggered by the US-Iran conflict.
Jet fuel prices have risen disproportionately to crude oil increases due to limited refining capacity, with only about 10% of refined oil producible as jet fuel under normal circumstances. Substantial refinery closures have compounded supply constraints, though new refining operations in West Africa and industry efforts to boost output to 12-14% have provided some relief. Additional pressures on airfare costs stem from aircraft delivery delays caused by capacity constraints at Boeing and Airbus, as well as staffing shortages at the Federal Aviation Administration affecting flight availability from major airports.
Even if a ceasefire materializes between the US and Iran, experts anticipate limited airfare reductions in the near term. Industry analysts note that historical precedent from Russia’s 2022 invasion of Ukraine suggests normalization may require approximately one year. Airlines face little incentive to reduce fares given sustained consumer demand and constrained capacity. The resolution of the conflict may prove different from previous geopolitical events due to heightened volatility and US jet fuel inventories remaining at the lower end of their five-year range.
Travel booking trends indicate continued pricing pressure ahead. Thanksgiving fares are tracking 19% higher than the comparable period in 2025. Industry observers recommend purchasing tickets promptly rather than waiting for significant price declines. While some major carriers including American Airlines, United Airlines and Delta have reported higher airfares offsetting elevated fuel expenses, many airlines globally operate with thin margins or depend primarily on cash flow generation. The closure of Spirit Airlines earlier this year has further reduced competitive pressure, potentially supporting sustained higher pricing across the industry.
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