Airfares can keep rising even as airline profits shrink because ticket prices are only one part of the equation: airlines’ fuel and other costs are rising faster than their total revenue. The International Air Transport Association (IATA) forecasts that global airline revenue will grow 9.4% in 2026 while operating expenses grow 13%, leaving net profit at $23 billion, down from $45 billion in 2025. Those are forecasts, not completed-year results. IATA’s June 2026 outlook expects airlines to absorb part of the fuel shock rather than pass all of it to passengers immediately.
How can airfare rise while airline profits fall?
A fare is revenue from a ticket; profit is what remains after an airline pays its costs. Higher ticket prices can increase revenue without increasing profit if fuel, labor, maintenance, aircraft leases and other expenses rise faster.
IATA’s June 2026 forecast puts the difference in scale: global airline revenue is projected to reach $1.165 trillion, up 9.4%, while operating expenses are projected to reach $1.117 trillion, up 13%. The forecast net profit is $23 billion, with a 2.0% net margin, compared with $45 billion and 4.2% in 2025. Revenue growth is not profit growth. IATA’s June outlook
The forecast does not mean every airline will lose money, or that every route will become more expensive by the same amount. It is an industry-wide projection; carriers differ in route mix, financial resilience, fuel hedging and ability to adjust schedules.
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Why is fuel putting so much pressure on airlines?
Fuel is a large operating expense, and the forecast increase is substantial. IATA projects global airline fuel costs of $350 billion in 2026, up from $252 billion in 2025. Fuel is forecast to account for 31.4% of operating expenses, compared with 25.4% in 2025. The June forecast assumes Brent crude averages $95 a barrel and jet fuel averages $152 a barrel, nearly 70% above the $90 jet-fuel average IATA cited for 2025. IATA’s June 2026 outlook
Crude oil is not the whole fuel bill. IATA also projected an average jet-fuel crack spread—the premium between jet fuel and crude—of $57 a barrel. Hedging can soften short-term price swings, but it cannot eliminate the impact of a sustained increase. Airlines had hedged roughly one-third of expected 2026 fuel consumption, and many hedge crude rather than jet fuel, leaving them exposed when the refining premium widens. IATA’s June 2026 outlook
Fuel is not the only pressure. IATA cited higher non-fuel expenses, including labor, aircraft leases and maintenance. Aircraft delivery shortfalls can keep older planes in service longer, adding maintenance and lease costs while delaying expected fuel-efficiency gains. IATA’s June outlook; IATA’s annual general meeting comments
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Why can’t airlines raise every fare as soon as fuel gets more expensive?
Airlines sell many tickets well before departure and plan seats and schedules months ahead. Once a passenger has bought a ticket, the airline generally cannot change that ticket’s price to cover a later fuel increase. A fare rise therefore affects new bookings, not all the seats already sold.
The timing can leave a meaningful share of upcoming travel priced at older levels. Associated Press reported that about 35% of United’s tickets for the final three months of 2026 had already been booked when the renewed fuel-price rise hit. United CFO Mike Leskinen said those fares could not be raised retroactively and that cost recovery would not be immediate. Associated Press reporting
That mismatch is why a sudden cost shock can squeeze profit even while current fares are climbing. IATA Director General Willie Walsh put it this way: “Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines.” IATA’s June 2026 outlook
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What do recent fare figures show—and what don’t they show?
Recent U.S. fare measures show increases, but they should not be confused with a global fare index or with airline profit. The Bureau of Transportation Statistics’ average U.S. fare, excluding optional fees, was $405 in 2025 Q4, $428 in 2026 Q1 and $436 in 2026 Q2, as reported by AP. Separately, AP reported that U.S. airfares in August 2026 were 23% above a year earlier, citing the Labor Department. These are U.S. figures with different measurement periods, not a statement about every route or the rest of the world. Associated Press reporting
Ticket yield and ticket revenue are also not the same thing as an individual traveler’s fare. IATA forecasts passenger ticket yields to rise 7% in 2026 and passenger ticket revenue to reach $839 billion, up 9.2%, while passenger demand measured in revenue passenger kilometers grows 2.1%. Those are global forecast measures; they do not mean every route’s fare will rise 7% or that every passenger will pay more by that amount. Ticket revenue also does not include the full picture of airline costs or establish the price of a specific ticket. IATA’s June 2026 outlook
Optional fees and other ancillary revenue are another reason an average ticket fare is not a complete measure of what travelers spend or what an airline earns. The cited U.S. average explicitly excludes optional fees. Route, fare class, booking date and carrier can all affect the price a passenger sees.
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Why can fares stay high after jet fuel falls?
Airfares do not necessarily move in lockstep with fuel prices. Tickets may have been sold at earlier prices, and airlines may still be managing elevated costs or uncertainty even after a fuel benchmark declines. A short-lived dip does not establish that the cost trend has reversed.
AP reported that the Argus U.S. Jet Fuel Index fell from an early-April 2026 peak of $4.88 per gallon to a June low of $2.70, while fares remained elevated; jet fuel then rose again. The same report relayed economist Brett House’s point that volatility itself is a challenge, not just the absolute fuel-price level. Stephen Treanor, a finance professor at California State University, Chico, told AP that jet fuel prices would need to fall and stay down for airfares to decline on a sustained basis. That is expert commentary, not a guaranteed timetable for every airline or route. Associated Press reporting
There is no single universal rule for how quickly fares respond when fuel becomes cheaper. The timing depends on when seats are sold, how long lower fuel costs persist, airline costs and route-level demand.
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How much did IATA’s 2026 profit forecast change?
IATA’s June 2026 outlook sharply revised its earlier forecast. The figures below compare two forecasts for the same year, not two realized results.
| IATA forecast for 2026 | December 2025 outlook | June 2026 outlook |
|---|---|---|
| Net profit | $41 billion | $23 billion |
| Net margin | 3.9% | 2.0% |
| Average jet fuel assumption | $88 per barrel | $152 per barrel |
The June outlook attributed the deterioration to the fuel shock and Middle East-related disruption. Because the forecast changed during the year, the December figures should not be read as actual 2026 profit or as evidence of how the year ultimately ended. IATA’s December 2025 outlook; IATA’s June 2026 outlook
Will airfare come down if jet fuel gets cheaper?
It could, but cheaper fuel alone does not guarantee an immediate or uniform fare drop. A sustained decline may ease an important airline cost, but fares also reflect when seats were booked, demand, other expenses and the competitive conditions on a route. For a traveler deciding whether to book, compare the actual itinerary and total price—including optional fees—rather than treating a fuel-price move or an industry forecast as a prediction for a particular ticket.
Demand is another limit on fare increases: passengers may balk if travel becomes unaffordable. Walsh said the open question was how long travelers and shippers would tolerate higher connectivity costs. The outlook is therefore not simply “fuel rises, fares rise by the same amount”; airlines must balance cost recovery against what customers will pay. IATA’s annual general meeting comments
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