'Airline ticket prices expected to increase': Surge in jet fuel expenses causes airline shares to tumble

Airline Stocks Drop Amid Soaring Oil Prices and Flight Disruptions

Airline shares tumbled on Monday as a surge in crude oil prices and widespread flight cancellations raised alarms about shrinking profit margins due to escalating jet fuel expenses.

Delta Air Lines (DAL) saw its stock fall by 5% before recovering some ground, while American Airlines (AAL) dropped as much as 6%, and United Airlines (UAL) slid up to 7%.

Investors reacted to the prospect of jet fuel costs rising as oil surpassed $110 per barrel for the first time since 2022. Jet fuel typically makes up 20% to 25% of airlines' total expenses. The recent escalation in oil prices was driven by halted traffic through the vital Strait of Hormuz amid ongoing conflict in Iran.

According to GasBuddy, jet fuel prices have climbed by as much as $1.75 per gallon in recent weeks. This spike could mean each major U.S. airline faces an additional $1.5 billion or more in fuel costs for the quarter.

Patrick De Haan, head of petroleum analysis at GasBuddy, estimated, "Combined, the three largest airlines could see nearly $5 billion in extra costs."

He also warned, "Travelers should expect airfare to increase in the coming months, even if oil prices begin to stabilize."

Last Friday, United Airlines CEO Scott Kirby commented that the effects of higher fuel prices on ticket costs would likely be felt very soon.

While U.S. airlines previously used financial instruments to hedge against rising fuel costs, most have moved away from this strategy due to the risks involved when oil prices fall. Southwest Airlines (LUV), once a leader in fuel hedging, discontinued the practice in 2025.

The conflict in the Middle East has already grounded over 20,000 flights, leaving thousands of travelers stranded.

European airlines have also been affected. Lufthansa (LHA.DE) shares dropped about 5% on Monday, while International Consolidated Airlines Group (IAG.L), the parent company of British Airways and Aer Lingus, fell 3%. Air France-KLM (AF.PA) also declined by 3%.

U.S. airlines have already been contending with other challenges this year, including severe storms that led to thousands of flight cancellations nationwide.

So far this year, Delta, American, and United have each seen their stock prices drop between 20% and 30%. Other domestic carriers such as Southwest (LUV), JetBlue (JBLU), and Alaska Airlines (ALK) have experienced declines of around 30% over the past month.

United Airlines CEO Scott Kirby recently noted that higher fuel expenses are likely to push up ticket prices quickly. (REUTERS/Jim Young/File Photo)