Key Highlights
- Jet fuel prices have surged 58% in one week, reaching $3.95 per gallon.
- United Airlines warns rising fuel costs could impact first-quarter and second-quarter earnings.
- Global flight disruptions have resulted in over 25,000 canceled flights in the Middle East.
- Airlines may raise ticket prices if fuel costs remain elevated.
- Demand remains strong, with bookings up 20% year-over-year.
Airlines Face Rising Costs as Fuel Prices Spike
Speaking at an event at Harvard University’s John A. Paulson School of Engineering and Applied Sciences, Kirby said the spike in fuel prices is already expected to have a “meaningful” impact on United Airlines’ financial results in the first quarter of 2026.
Jet fuel — the second-largest cost for airlines after labor — has climbed sharply since the U.S. and Israel launched attacks on Iran, triggering a rapid increase in energy prices across global markets.
According to the Argus U.S. Jet Fuel Index, prices jumped 58% in just one week, reaching approximately $3.95 per gallon.
Higher Airfares Could Come Quickly
Kirby warned that if elevated fuel prices persist, airlines may soon pass those costs on to travelers.
“When asked when higher fuel costs might begin affecting ticket prices, Kirby said increases would ‘probably start quick.’”
Airlines often respond to fuel volatility by adjusting ticket prices, route networks, and capacity levels. However, unlike many carriers in previous decades, most U.S. airlines today no longer hedge fuel costs, meaning they do not lock in prices through futures contracts.
Hedging strategies became less common after airlines suffered heavy losses when oil prices collapsed during the pandemic and previous market downturns.
Global Travel Disruptions Intensify
The geopolitical conflict has also triggered major disruptions across global aviation.
Since the attacks on Iran and subsequent retaliatory strikes, more than 25,000 flights across the Middle East have been canceled, leaving over one million travelers stranded worldwide.
The region contains several of the most critical aviation hubs in the global travel network.
Among them:
- Dubai International Airport, the world’s busiest international airport
- Hamad International Airport in Doha, a major transit hub connecting Europe, Asia, and Australia
With airspace closures across the region, airlines have been forced to reroute or cancel flights, dramatically reshaping travel patterns.
Demand Remains Surprisingly Strong
Despite the disruptions, United Airlines says overall travel demand has remained resilient.
Kirby revealed that booked revenue is currently up 20% compared with last year, indicating that passengers continue traveling despite the uncertainty.
In fact, the crisis has unexpectedly boosted demand on certain routes.
For example, travelers from Australia and New Zealand who previously flew through Middle Eastern hubs are now rerouting through alternative destinations.
“Each day this week, we have booked over 1,000 passengers from Australia and New Zealand to Europe, compared with less than one per day last year,” Kirby said.
As a result, Europe has become the strongest booking region for United Airlines during the current disruption.
Airlines Consider Emergency Evacuation Flights
United Airlines is also exploring potential emergency charter operations.
Kirby confirmed that the company has been in discussions with the U.S. government about possibly operating evacuation flights for American citizens stranded in the Middle East.
However, no formal plans have been finalized.
Government-chartered flights have historically been used during major international crises when commercial travel becomes impossible.
Energy Markets Driving Airline Uncertainty
The airline industry remains extremely sensitive to changes in energy markets.
Oil prices initially surged nearly 20% following the outbreak of conflict, raising fears of supply disruptions and potential threats to the Strait of Hormuz, one of the most important oil shipping routes in the world.
Roughly 20% of global oil supplies move through the narrow waterway.
Any prolonged disruption could push fuel prices even higher — and intensify pressure on airline profitability.
What Travelers Should Expect
If fuel prices remain elevated, travelers could soon see:
- Higher airline ticket prices
- Fewer flights on certain routes
- Longer travel times due to rerouting
- Continued disruptions in Middle Eastern airspace
However, strong global travel demand suggests that airlines may still maintain robust capacity on high-demand routes.
Outlook for the Aviation Industry
Airlines will soon provide updated financial outlooks at the upcoming JPMorgan airline industry conference, where executives typically revise earnings forecasts and discuss market conditions.
For now, the industry faces a delicate balance: managing rising fuel costs while maintaining strong passenger demand in a rapidly shifting geopolitical landscape.
If tensions ease and oil prices stabilize, airfare increases may remain limited. But if energy markets remain volatile, travelers could soon face higher costs for flights worldwide.
