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This chart shows the percent change in the cost of jet fuel in the US in 2026, and it's not good. Same thing in Europe, where the price of jet fuel is at an almost 4-year high. Since the conflict in the Middle East led to the Strait of Hormuz closing, about 20% of global oil supply has been choked off, sending the price sky-high and leaving airlines stuck with enormous bills for fuel. Costs are way up for airlines, and ultimately air travel becomes more expensive for passengers. Airlines who struggle to make money in the best of times potentially see this as an opportunity to raise prices, obviously in the name of higher fuel
costs, but to keep those prices higher for longer, maybe even never bringing them back down. So far, the war may be costing the airline industry an additional $15 billion, and it's hitting low-cost airlines especially hard, even contributing to the May 2026 closure of Spirit Airlines. But that could only be the beginning for the industry and consumers as airlines face down a crisis. Fuel generally accounts for about 25% of operating costs for an airline. If the price of fuel is impacted, so is the airline's bottom line. So that we're talking literally hundreds of millions into the billions of dollars collectively as an as a US
industry in extra fuel. And you've probably noticed how airlines have passed many of those costs onto consumers. They upped bag fees, which will not come back down, by the way. They are immediately upping fares. They are cutting routes that are now unprofitable because it's too expensive to run them with the higher fuel costs. CEO Scott Kirby says consumers should be aware that ticket prices are rising, and he warns the increase needs to be at least 20% to offset rising fuel costs amid the war with Iran. We are absorbing probably 50% of the cost on our own, and probably about 50% will go into pricing. For the big companies like Delta, United, and American, despite revised
profit outlooks, business is still booming. That's because they're much more dependent on their premium offerings and customers who are still reliably buying expensive flights. If you look at the profit per seat, many airlines make much more money off business class and particularly premium economy passengers. Before the 1978 Airline Deregulation Act, flying was firmly for the wealthy. Since then, the introduction of low-cost airlines has made travel cheaper and more accessible for many. But these smaller, more affordable carriers don't have the same resources as big companies for offsetting fuel costs.
They don't have long-haul business class to lean back on. They don't have billion-dollar-a-year loyalty programs to lean on. They don't have millions of people signing up for their credit cards every month. airlines only have enough money in the bank to keep operating for, you know, weeks. Just look at Spirit Airlines, which recently collapsed, publicly stating it couldn't keep up with the cost of fuel. And when a low-cost carrier like Spirit goes under, it has a ripple effect through the entire industry. When a low-cost carrier comes into a specific market, those fares almost always start coming down. When you they go away, the opposite happens.
The moment Spirit goes out of business, you're going to be paying more. We've already seen in the weeks since Spirit has shut down that fares have gone up on those routes. There are folks that are not going to be able to fly at all with the death of Spirit. There were airlines already who are struggling to remain solvent, and these extra costs will push them over the edge. People expect, whether in Europe or America or across the world, there are going to be many others to follow. European airlines also face another issue, a looming fuel shortage. In April, the head of the International Energy Agency claimed that Europe is running out of fuel. In Europe, we have maybe 6 weeks or so jet fuel left. If we are not able to open the Strait of
Hormuz. Since then, the shortage in Europe has been temporarily resolved by tapping into emergency reserves, importing from other countries, and redirecting fuel cargoes. But, these fixes are only set to last through the end of the summer. They're saying we're good till August. We want to prepare for the worst, but we also don't want to panic the public or our shareholders or the stock market. All of these factors, fuel costs, shortages, and financial struggles for low-cost carriers could kickstart long-term changes in how airlines operate and who can afford to fly. If the conflict carries on for the rest of this year and jet fuel prices stay as
high as they are or maybe even keep going up, this could tip into being a full-blown crisis for the global aviation industry. We would see a much larger wave of bankruptcies and consolidation. People could be priced out of flying for years to come. Less competition, higher fares, loss of jobs, loss of service, loss of non-stop flights. Nothing but bad stuff for both labor and consumers. Even if the war were to end tomorrow, the cost of jet fuel and the airline industry at large could take a while to stabilize. If the war is settled and oil is flowing again out of Iran, even if that happens, we're still looking at problems for months to come.
And if people flying on the major airlines are willing to pay more for tickets now, it begs the question whether fare prices will come down even when the war ends. I don't think that they're going to bring down fares. I think they're 100% going to ride the wave, bank on the fact that people are going to accept that this is the new norm as we constantly keep doing, and ride the high. What's more, airlines were already raising prices before the war with Iran after over 40 years of consistently dropping. The cost of jet fuel could keep ticket prices climbing to the point where travelers with lower incomes could
just be priced out of flying altogether. There's been a feature of the last few decades where flying has become incredibly affordable. Some people worry if prices rise too much, particularly with the inflation in the economy and the cost of living squeeze going on everywhere else, that this might be an era that might potentially be coming towards an end. At the center of this issue is an existential question. Is air travel a transportation necessity or a luxury privilege? It makes sense for them and for their shareholders, but it doesn't make sense as a national transportation system that's so vital to all of us.
Only time will tell whether this is a moment of short-term economic pain brought on by the war or the beginning of a systemic shift in how we fly.
