# U.S. airlines are choosing higher fares over fuller planes as fuel costs bite

Published 2026-10-23 · Transportation on MarketScale
Canonical: https://www.marketscale.com/industries/transportation/us-airlines-are-choosing-higher-fares-over-fuller-planes-as-fuel-costs-bite

> Passenger revenue across the five largest carriers rose 18% in the third quarter while traffic grew less than 1%. TSA screened 2.9% fewer people. With jet fuel near $4.63 a gallon, the industry has decided it would rather protect margins than fill seats.

## Key points

- U.S. airfares rose 23% year over year through September while overall consumer prices rose 3.6%, with holiday fares up 22-39%.

The arithmetic of the third quarter tells the story of the American airline industry in one line. Across Delta, United, American, Southwest and Alaska, passenger revenue rose nearly $8.8 billion, or 18%, from a year earlier, while passenger traffic grew by less than 1%, according to a Reuters analysis of the carriers' results. The airlines made more money by flying roughly the same number of people and charging them considerably more.

> Across Delta, United, American, Southwest and Alaska, passenger revenue rose nearly $8.8 billion, or 18%, from a year earlier, while passenger traffic grew by less than 1%. — Reuters analysis

## Fewer passengers amid rising fuel costs

Fewer people are showing up at the airport. The Transportation Security Administration screened 2.9% fewer passengers in the quarter than a year earlier, Reuters reported. United is the exception; its passenger count rose more than 2%. The rest of the industry let traffic slip and took the price.

Fuel is why. Gulf Coast spot jet fuel rose from $2.43 a gallon before the conflict in the Middle East began in February to $4.63 on October 20, per Reuters. CNN's Chris Isidore reported that the four largest carriers spent $6.3 billion more on fuel in the quarter than a year earlier, about $69 million a day, with jet fuel costs up more than 60% year over year. United expects to pay about $4.80 a gallon in the fourth quarter and cut its adjusted 2026 earnings outlook to a range that tops out near $7.22 a share, down from an earlier $9 to $11, CNBC reported. American, Delta and Southwest also cut their 2026 forecasts this month. American is the only one of the four that now expects a loss for the year. Forbes went further, projecting that most airlines will lose money in 2026 as fuel absorbs what would have been profit.

> CNN's Chris Isidore reported that the four largest carriers spent $6.3 billion more on fuel in the quarter than a year earlier, about $69 million a day, with jet fuel costs up more than 60% year over year.

## Impact on passengers and fares

Passengers are paying the difference. U.S. airfares rose nearly 23% from a year earlier over the seven months through September, against a 3.6% rise in overall consumer prices, according to the Reuters analysis. CNN, citing consumer price index data, put the summer increase at about 25%, and cited Hopper figures showing Thanksgiving tickets averaging $389, up 39% from last year, and Christmas-period tickets averaging $452, up 22%. CNBC reported that executives are not worried about the softer traffic, because the customers who keep flying at these prices are the ones who were always going to, and they are more profitable per seat.

Southwest is the partial outlier in the earnings picture. The American Bazaar reported that its third-quarter adjusted earnings came in at 66 cents a share, up from 11 cents a year earlier and above the 58 cents analysts expected, even as the airline cut its full-year adjusted forecast to $2.60 to $2.85 a share from $3.25 to $4.25. Its fuel bill rose $821 million year over year, and it expects jet fuel to average $4.55 a gallon in the fourth quarter.

## Airlines' future strategy and capacity plans

The capacity side of the plan shows how temporary the carriers think the strategy is. Six major U.S. airlines plan to grow domestic capacity 3.0% in the fourth quarter from a year earlier and 3.8% in the first quarter of 2027, per Reuters. More seats chasing fewer passengers would normally pull fares back down. United chief executive Scott Kirby told CNN he expects pricing to hold, and United is planning on fuel staying expensive through 2027. Delta chief executive Ed Bastian described the higher fares as sustainable even if fuel prices fall, CNN reported. Analysts quoted by Reuters are less sure that fares can rise 23% without eventually discouraging the travelers who have so far kept booking.

For corporate travel managers and the businesses that depend on moving people, the near-term outlook is clear enough. CNN reported that holiday fares are not expected to improve, that travelers are booking earlier and pushing prices higher, and that airlines have trimmed the cheaper midweek, Saturday and off-hours flights. Budget for it. Lock in negotiated rates where carriers will still offer them, and expect thinner schedules on the routes that were marginal before fuel doubled.

## Fuel exposure beyond airlines

For the logistics and shipping side of transportation, the signal is about fuel exposure more than seats. An industry that has trained its customers to accept 23% fare increases has shown what a doubling in energy cost does to pricing power when demand is steady. Trucking and ocean carriers facing the same fuel curve will be watching how long the airlines can hold the line before capacity growth in 2027 forces the question.

## Sources

- [Analysis: US Airlines Favor Higher Fares Over Fuller Planes as Fuel Costs Squeeze Profits](https://www.usnews.com/news/top-news/articles/2026-10-23/analysis-us-airlines-favor-higher-fares-over-fuller-planes-as-fuel-costs-squeeze-profits) (Reuters)
- [Fewer people are flying as airfare soars. Here's why airlines aren't worried](https://www.cnbc.com/2026/10/23/airfare-airline-capacity.html) (CNBC)
- [United Airlines slashes 2026 profit outlook on fuel prices, but travelers keep booking despite higher fares](https://www.cnbc.com/2026/10/20/united-airlines-ual-3q-2026-earnings.html) (CNBC)
- [Airfares are way up compared to last year. Don't expect it to change this holiday season](https://localnews8.com/money/cnn-business-consumer/2026/10/23/airfares-are-way-up-compared-to-last-year-dont-expect-it-to-change-this-holiday-season/) (CNN)
- [Southwest Airlines cuts 2026 profit forecast as rising fuel costs squeeze earnings](https://americanbazaaronline.com/2026/10/22/southwest-airlines-cuts-2026-profit-forecast-as-rising-fuel-costs-squeeze-earnings-490573/) (The American Bazaar)

Tags: airlines, jet fuel, airfares, transportation, earnings, capacity

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