It’s The Oil Prices, Stupid

Has anyone tried to book a flight lately? I’m heading home to watch the University of Michigan beat Michigan State on November 7, and I finally got around to buying a ticket last week. Depending on the carrier, it was anywhere from $700 to $1,200. That’s roundtrip LGA->DTW for a non-holiday weekend.

I miss Spirit Airlines. I miss a calm Strait of Hormuz. 

Skift airline reporter Meghna Maharishi explained where those fares are coming from this week. Jet fuel averaged $4.37 a gallon in September, an all-time monthly high that topped April’s $4.29. By Thursday afternoon, it was at $4.50. Prices have been volatile since the Iran war began, and they’ve crept up as fighting in the region has intensified.

Airlines have passed much of that on to fliers like us. The average domestic airfare is up about 32% from last year, according to Kayak. Carriers have also raised fees, cut capacity, and kept adding premium seats. United CEO Scott Kirby doesn’t expect the cheap seats to return. “There are no more $9 fares from Houston to Central America or $4 tickets from Los Angeles to Cabo with some of the crazy stuff — that just doesn’t exist anymore,” he said on the airline’s July earnings call. “I don’t think it’s ever going to exist again.”

But for most carriers, the higher fares still won’t produce a profit. Deutsche Bank’s Oct. 5 note expects only four major U.S. carriers to make money this year: Delta, United, Southwest, and Allegiant. American, Alaska, JetBlue, and Frontier are projected to lose money in 2026. 

Delta, the first to report this earnings season, showed how that works on Friday. Third-quarter revenue rose 16% to $17.59 billion. But the airline also cut its 2026 earnings forecast and expects to absorb an additional $6 billion in fuel costs this year. CFO Erik Snell told reporters the revision came from jet fuel. “All of it’s fuel,” he said.

So far, demand has held. Melius Research analyst Conor Cunningham thinks the real test is still coming, because industry capacity is picking up just as consumer sentiment weakens. “We haven’t seen real demand pushback to higher fares yet, but another round of aggressive hikes could test that,” he wrote.

For me, I’m still flying. But instead of the highway robbery of paying cash for my ticket, I opted to burn 61,000 American Airlines miles. The Wolverines better win by about as much.

The forces reshaping travel, AI entering the booking path, the rebuilt payments and distribution stack, the next chapter for aviation, and the rooms where senior women in travel set the agenda, don't stay in their lanes.

Skift convenes the operators, investors, and commercial leaders making the calls across every one of them, grounded in Skift Research.

Andrew Zimmern argues that travel is entering a “trust economy” as AI-generated content, social media, and millions of self-proclaimed travel experts make it harder for travelers to know who to believe.