Soaring Jet Fuel Prices Force Major U.S. Airlines to Cut Flights and Rethink Schedules
Major U.S. airlines are beginning to scale back flights and reconsider future schedules as a sharp increase in jet fuel prices drives operating costs substantially higher, with executives at American Airlines, United Airlines and Southwest Airlines all signaling adjustments in response to the surge, Fox News reports.
The global average price of jet fuel climbed 6.1% in a single week to $181.46 per barrel last week, according to figures from the International Air Transport Association, putting additional pressure on an industry for which fuel represents one of the largest operating expenses.
American Airlines Chief Financial Officer Devon May told attendees at Morgan Stanley’s 14th Annual Laguna Conference that jet fuel prices for the fourth quarter are currently running approximately $1 per gallon above the level the airline had anticipated when it issued projections in July. That difference could increase American’s fuel expenses by approximately $1 billion.
“Overall for the third quarter, we feel great,” May said. “What’s happened in the last four weeks, though is fuel’s run up probably $1 a gallon or something like that for the fourth quarter alone.”
With those additional costs looming, May said American intends to make further capacity adjustments during the latter portion of the fourth quarter.
Despite the fuel-price spike, American Airlines CEO Robert Isom said the carrier continues to project third-quarter revenue growth of between 16% and 19% compared with the same period last year. The airline has reported strength in both its domestic and international businesses, as well as among premium and economy travelers.
“When you take into account fuel right now, yes, we’ve absolutely done a great job of recapturing a tremendous amount of that expense,” Isom said.
United Airlines is also preparing to remove some flights from its schedule. Chief Financial Officer Michael Leskinen said the carrier will no longer operate certain December flights that it had previously planned, citing the higher cost of fuel.
“As you look into the fourth quarter, there’ll be some flights in December that we won’t fly that we thought we were going to fly,” he said at the Morgan Stanley conference. “If fuel remains high, we’ll make some adjustments into the first quarter and beyond into 2027.”
At the same time, United says passenger demand has remained robust. Leskinen characterized the airline’s fourth-quarter bookings as “tremendously strong,” with premium travel, corporate business and economy bookings all holding up despite the higher fuel environment.
“Bookings have continued as we expected, so that piece of the equation is resilient — very little evidence of demand destruction,” Leskinen said.
Southwest Airlines is similarly examining capacity as fuel expenses climb. Chief Financial Officer Tom Doxey said during the conference that Southwest has already eliminated approximately half of the relatively modest year-over-year capacity growth it had envisioned at the beginning of 2026.
“If fuel is higher for longer,” Doxey said, trimming capacity would be the “natural response.”
Southwest, however, emphasized that the schedule changes it has made thus far have been limited. A company spokesperson told FOX Business that Doxey was making an “illustrative point” about how the airline could respond to sustained high fuel prices and was “not alluding to an action we’ve taken.”
The airline has also received some help from stronger-than-anticipated passenger demand this fall. Doxey said improved bookings have helped Southwest absorb some of the additional fuel expense, enabling the carrier to maintain its third-quarter earnings outlook.
The comments from all three carriers point to a similar balancing act across the airline industry: passenger demand remains healthy, but if elevated jet fuel prices persist, airlines are prepared to operate fewer flights rather than absorb the full impact of sharply higher fuel bills.
{Matzav.com}
