Anyone who has booked a flight lately knows fares aren’t cheap.
Jet fuel is one of the largest cost airlines pay, according to the U.S. Department of Transportation. When prices jump, the cost almost always finds its way to your seat.
That’s the backdrop for a new warning from the group that speaks for the global airline industry. And the numbers behind it are hard to ignore.
Why jet fuel prices are key for airlines
To understand the warning, you first need to understand how airlines make money, or fail to.
The airline business is quite brutal, given that companies report razor-thin margins even when fuel prices are low.Â
Fuel typically eats up about one-third of an airline’s total operating costs, according to the International Air Transport Association (IATA), the trade body representing roughly 350 airlines worldwide.
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So when fuel prices spike, profits don’t just dip. They can vanish.
That’s exactly what’s playing out now.
The trigger was the closure of the Strait of Hormuz on Feb. 28, 2026, after military strikes in the region. That narrow waterway is one of the most important shipping lanes on the planet.
About 19% of the world’s crude oil normally passes through it, according to IATA. Its shutdown knocked roughly 10 million barrels per day off global supply and briefly pushed crude prices toward $150 per barrel.
For travelers, the math is simple. Higher fuel costs eventually mean higher fares.
Kevin Carter/Getty Images
IATA cuts airline profit forecast in half
IATA now expects the global airline industry to bring in a net profit of just $23 billion in 2026, according to its Global Outlook for Air Transport report released in June. That’s down by about half from its earlier forecast.
The net profit margin is expected to fall to 2%, the weakest result since the COVID years, IATA said.
Put another way, airlines are projected to earn roughly $4.50 in profit per passenger this year. Back in 2016, that figure was $10.10.
Jet fuel is the main culprit as prices have essentially doubled since late February, IATA reports.
Related: Airline cancels almost all flights, passengers stranded
The trade group now assumes an average jet fuel price of $152 per barrel for 2026, nearly 70% higher than last year. And airlines can’t simply pass all of that along.
In the report, IATA detailed:
“With jet fuel prices expected to rise by almost 70%, fares will necessarily have to rise, or airlines will fail.”
Historically, though, carriers have rarely managed to pass the full fuel hit on to customers. That gap between rising costs and what flyers will pay is where profits get squeezed.
How Delta Air Lines is navigating the headwind
The fuel hit lands hardest on carriers that compete on price alone, which should allow Delta Air Lines to outperform peers.
Speaking at TD Cowen’s Future of the Consumer Conference on June 3, Chief Marketing and Product Officer Ranjan Goswami said Delta (DAL) has spent 15 years decommoditizing travel through reliability, premium cabins, and a loyalty ecosystem wrapping everyday brands like American Express, Uber, and Starbucks.
The result is roughly a 15% unit-revenue premium over the industry, a cushion rivals lack. That matters when fuel eats a third of operating costs.
Delta also leans on co-brand card economics, with Amex spending nearing 1% of U.S. GDP, plus record direct sales and Delta Sync content deals that monetize the cabin beyond the ticket.
Goswami said demand stayed “very strong and resilient,” with corporate, premium and main cabin all up.
It shows in the forecasts: Wall Street pegs Delta’s 2026 net margin near 5%, the strongest of the four major U.S. carriers.
According to Wall Street estimates, here are the net margin projections for the four major U.S. airline operators for Q2 and 2026.Â
Net margin estimates for Q2 of 2026:
- Delta Air Lines: 5.2%
- American Airlines: 0.0%
- United Airlines: 3.2%
- Southwest Airlines: 2.7%
Net margin estimates for 2026:
- Delta Air Lines: 5%
- American Airlines: 0.0%
- United Airlines: 4.4%
- Southwest Airlines: 4%
What higher airline costs mean for your next flight
So what does this mean if you’re planning a trip?
Expect to pay more, just not all at once.
- IATA forecasts the average return fare will climb about 7.7% in 2026 to $462.
- Airlines are also leaning harder on extra fees, the portion that isn’t part of the base ticket.
- Charges for checked bags and seat selection are doing a lot of heavy lifting.
- IATA expects this “ancillary” revenue to rise by 12.6% this year, faster than ticket prices.
Middle East carriers are getting hit hardest, with passenger traffic in the region dropping nearly 60% in March and April as airspace restrictions forced cancellations and reroutes, according to IATA.
Other regions are picking up traffic that’s being rerouted away from the conflict zone. Africa is forecast to grow by 10% this year, and Asia-Pacific is expected to grow by 5.1%.
Comparatively, traffic in North America is projected to grow by just 0.8% due to a maturing market and higher fares.Â
Notably, the summer travel season includes the 2026 FIFA World Cup across the U.S., Mexico, and Canada, a rare demand tailwind that lands just as costs climb.
The bigger picture for airlines and travelers
The takeaway from IATA is blunt: the industry is still profitable, but barely, and it has very little cushion left.
Airlines spent years rebuilding their finances after the pandemic. Now a fuel shock is testing that progress all over again.
IATA also warned that if fuel prices remain this high through year-end, the industry could incur an outright loss.
For travelers, the message is simpler. Cheaper-than-expected airfare may be a thing of the past for a while, and the reason traces all the way back to a 33-kilometer-wide stretch of water in the Persian Gulf.
Related: Another airline files for bankruptcy, cancels flights