TORONTO — U.S. airlines are raising fares and rethinking capacity plans as soaring jet fuel costs put pressure on profits despite strong demand for air travel.
As reported by Reuters, third-quarter results from major U.S. carriers show that higher ticket prices have helped generate record revenues, but not enough to offset the sharp rise in fuel expenses. Delta Air Lines, Southwest Airlines and American Airlines have lowered their 2026 earnings forecasts, while United Airlines expects fourth-quarter profit to fall well below analysts’ expectations.
“The fourth quarter is shaping up to be an operationally tough quarter with jet fuel prices expected to remain elevated, diminished capacity plans, but durable revenue trends from consumers,” Third Bridge analyst Liam Dorsey said.
The pressure comes as airlines contend with fuel prices expected to reach between US$4.25 and US$4.85 per gallon, up from levels well below US$4 in the third quarter. U.S. airfares rose nearly 23% year over year on average during the seven months through September, according to U.S. Labor Department data.
Despite those increases, airlines are struggling to pass on the full impact of higher fuel costs without risking a slowdown in passenger demand.
All four of the largest U.S. carriers reported record third-quarter revenue. However, Alaska Air forecast a larger-than-expected fourth-quarter loss, while JetBlue Airways and Frontier Airlines were scheduled to report their third-quarter results the following week.
With further fare increases potentially discouraging travellers, airlines are also considering tighter capacity plans to protect pricing and profitability. Delta CEO Ed Bastian has said carriers may need to curb flight growth further next year, while American Airlines expects its network growth to slow in 2027 compared with this year.
The financial strain is also raising questions about the industry’s longer-term outlook. United Airlines CEO Scott Kirby has warned of further structural change in the sector by the end of next year, as carriers grapple with persistently high fuel costs and pressure on margins.
The challenges extend beyond the U.S. In Europe, Ryanair CEO Michael O’Leary has warned that airfares could see their largest-ever increase next year.
