American, United, Delta and other major carriers are betting that emptier planes can protect profit margins through higher ticket prices.
Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group have angled their businesses to generate more passenger revenue through higher individual prices as jet fuel prices climb—U.S. airfares have climbed 22.4% year over year.
The five major airlines generated nearly $8.8 billion more in passenger revenue in Q3 2026 than in Q3 2025—an 18% increase, according to Reuters. But passenger traffic grew less than 1%.
“If fuel stays elevated, we have to continue to push yield up so that we can make a bit of money,” Devon May, American Airlines chief financial officer, told Reuters.
Jet fuel prices forcing their hand
The central pressure on airlines is the cost of fuel, one of the industry’s largest operating expenses. Gulf Coast spot jet fuel prices rose from $2.43 per gallon before the war began in February to $4.63 in October—an increase of roughly 91%, according to the U.S. Energy Information Administration.
The increase has been driven mainly by disruptions to oil supplies and refining capacity associated with the conflict. The International Air Transport Association’s jet fuel price monitor tracked global jet fuel prices at about $99 per barrel in February before prices more than doubled to $209 in April.
Fuel’s importance to airline economics makes that swing extremely costly—and potentially dangerous for airlines. The IATA projects that fuel will account for nearly one-third of airline operating expenses in 2026, compared to about one-quarter in 2025.
“All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices,” Willie Walsh, IATA’s Director General, said in a press release. “Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level. Smaller carriers that started the year with weak balance sheets are certainly struggling.”
The cost increases also expose the timing problem. Airlines typically sell tickets months ahead of departure, meaning they can’t raise the price of seats that passengers have already purchased. That leaves carriers to recover expenses through ticket fares on the few that haven’t already been sold.
Higher fares, more revenue, fewer passengers—but no profit?
Higher fares are lifting revenue even when passenger growth remains weak, but fuel costs are absorbing much of that additional income.
According to the Bureau of Labor Statistics’ consumer price index for September, airline fares were 22.4% higher than a year earlier. The inflation rate was only 3.7%, meaning the airfare increases were substantially outpacing the overall rise in consumer prices.
American Airlines is a clear example of that in action. The carrier reported record Q3 revenue of $16.3 billion, but higher fuel expenses continued to weigh on its bottom line. Chief commercial officer Nathaniel Pieper said the airline deliberately accepted lower load factors—or seat occupancy—in exchange for higher revenue per passenger.
“We were deliberate in how we managed revenue during the quarter,” Pieper said in the Q3 2026 earnings call. “We prioritized yield over load factor, proactively securing meaningfully higher yields in exchange for slightly lower loads.”
United Airlines adopted a similar approach. Its leisure load factor—which measures the share of available seats occupied—declined 1.3 percentage points in Q3. Chief commercial officer Andrew Nocella said in the company’s Q3 2026 earnings call that higher prices produced some sensitivity among travelers, but the airline considers the tradeoff worthwhile—saying it’s a “trade we would make every day.”
Southwest also reported strong fare growth—its average passenger fare rose 21.6% in the first nine months of the year, and by the third quarter, that rose to 26.9%.
“Customers are responding to the enhanced Southwest offering, and it shows in our results,” Bob Jordan, president and CEO of Southwest Airlines,said in a press release. “Demand remained strong as we lapped last year’s bag fee and other commercial initiatives, reinforcing our belief that the earnings power we’ve built is durable, even with significantly higher fuel costs.”
And the revenue gains didn’t eliminate the financial strain of rising costs for the airlines. Delta Air Lines cut its annual earnings forecast as it expects “to generate a pre-tax profit of roughly $4.5 billion, absorbing a $6 billion increase in fuel costs.”
Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group did not immediately respond to a request for comment from Fortune.
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