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Why airfares are going up: US fares rise 22.4% as jet fuel jumps

American, United and Southwest paid $3.85 to $3.92 a gallon for jet fuel in the third quarter. All three are slowing growth rather than filling planes with cheap seats, and executives say fares are still below 2019 levels after inflation.

By Rowan Ashby Published 24.10.26 02:15 UTC 7 min read

Tails of two American Airlines jets at Washington National Airport framing the Washington Monument — G. Edward Johnson / Wikimedia Commons / CC BY 4.0 · Source

Key takeaways

US airline fares were 22.4% higher in September 2026 than a year earlier, according to the Bureau of Labor Statistics, against 3.7% inflation overall.
Jet fuel is the main driver: American, United and Southwest each paid between $3.85 and $3.92 a gallon in the third quarter, up roughly 60% from a year earlier.
All three carriers now plan for fourth-quarter fuel of about $4.55 to $4.80 a gallon, and all three are slowing growth or cutting weaker flying rather than filling planes with cheap seats.
American accepted a 2.6-point drop in load factor in exchange for higher yields; Southwest cut its 2026 capacity growth to about 1.2%; United says it will drop flights that lose money.
Executives at all three say fares are still below 2019 levels after inflation, which signals that they see room to keep prices high while fuel stays elevated.

Why are airfares going up? Fuel, then fewer cheap seats

Why are airfares going up? US fares were 22.4% higher in September 2026 than a year earlier, mainly because jet fuel costs about 60% more and American Airlines, United and Southwest are passing that cost on through higher fares.

They are also choosing to fly less than planned instead of filling planes with discounted tickets. Third-quarter earnings releases filed between October 20 and October 22 put numbers on that strategy.

The September consumer price index, released by the Bureau of Labor Statistics on October 14, showed the airline fare index up 22.4% from a year earlier and 1.2% from August on a seasonally adjusted basis. Reuters reported on October 22 that fares rose an average of nearly 23% year on year in the seven months through September.

The cost side explains most of that. Brent crude traded at $115.22 a barrel and US Gulf Coast jet fuel at $4.632 a gallon on October 20, 2026, according to U.S. Energy Information Administration daily spot data. Fuel prices have climbed alongside crude during the conflict involving Iran, which Reuters says is now in its eighth month. For background on how oil shocks spread through the economy, see our explainer on how oil price shocks hit inflation and rates and the latest weekly oil price brief.

What American, United and Southwest told investors

The table below sets out what each carrier reported for the third quarter of 2026 and what it guided for the fourth quarter. Figures come from the companies' earnings releases filed with the U.S. Securities and Exchange Commission.

Carrier	Q3 2026 fuel price (per gallon)	Q3 fuel expense change	Q3 capacity (ASMs, y/y)	Q4 2026 fuel assumption	Q4 2026 capacity guidance	Fare and unit revenue signal
American Airlines	$3.85 (up 62.7%)	+$1.9 billion (+67.5%)	+4.2%	~$4.70	+5.5% to +6.5%; 2027 growth to slow	Passenger yield +18.3%; Q4 revenue seen +19.5% to +22.5%
United Airlines	$3.90 (up 60.3%)	+$1.8 billion (+61.6%)	+1.3%	~$4.80	No figure given; "voluntary reductions" cited on the call	TRASM +15.9%; Q4 revenue growth seen above 20%
Southwest Airlines	$3.92 (vs $2.40)	+$821 million	-0.4%	~$4.55	+3% to +4%; full-year 2026 cut to ~1.2% from ~1.5%	Average fare +26.9% to $231.69; Q4 RASM seen +19% to +21%

Sources: American Airlines Group Q3 2026 release (Oct 22, 2026); United Airlines Holdings Q3 2026 release and investor update (Oct 20, 2026); Southwest Airlines Q3 2026 release (Oct 21, 2026). Fuel assumptions are company planning figures based on forward curves in mid-October, not market prices.

American Airlines: yield over full planes

American posted record third-quarter revenue of $16.3 billion, up 19.3%, but swung to an adjusted net loss of $182 million because fuel expense rose by about $1.9 billion. Its load factor, the share of seats filled, fell 2.6 points to 83.4%, while passenger yield rose 18.3%.

That trade-off was deliberate. On the October 22 earnings call, revenue chief Nathaniel Pieper said the airline "prioritized yield over load factor." Chief executive Robert Isom said American now expects its 2027 growth rate to "decelerate considerably" and that its bias on capacity is "to the downside." American still guides fourth-quarter capacity up 5.5% to 6.5%, so the slowdown is mainly about next year, not the holiday schedule already on sale. The company expects an adjusted loss of $1.00 to $1.60 per share for 2026.

United Airlines: cut flights that lose money

United reported record revenue of $17.9 billion and net income of $1.03 billion, but its fourth-quarter guidance of $0.50 to $1.50 in adjusted earnings per share assumes fuel near $4.80 a gallon. United said that assumption is about $0.45 above the level used in analyst consensus, a gap worth roughly $1.00 a share in a single quarter.

Chief financial officer Mike Leskinen told analysts the airline will have "no hesitation" to cut flights that lose money. Reuters reported that United recaptured 72% of its extra fuel cost through revenue in the third quarter, and Leskinen said fourth-quarter recapture should be similar. In mid-September, Leskinen had already said United removed some flights starting in December, according to a Reuters report summarised by Live and Let's Fly. Chief executive Scott Kirby said it was "low probability" that every airline flies its full current capacity plan if oil stays high.

Southwest Airlines: smaller growth, stronger markets

Southwest's average passenger fare rose 26.9% to $231.69 in the third quarter, the biggest fare increase of the three, while capacity fell 0.4%. Its load factor held flat at 79.8%. The carrier trimmed its full-year 2026 capacity growth to about 1.2% from about 1.5% and plans to retire roughly 60 aircraft this year.

On the call, executives said Southwest is concentrating capacity in its strongest markets, such as Nashville, Las Vegas, Orlando and San Diego, and pulling it from weaker ones. Chief executive Bob Jordan said the airline is "not gonna chase growth at the expense of returns or profitability." Southwest will set out a multi-year plan at a capital markets day on March 2, 2027.

Why airlines prefer higher fares to fuller planes

An airline's fuel bill depends mostly on how many flights it operates, not how many people are on board. When fuel is cheap, a half-empty off-peak flight can still cover its costs with discounted tickets. When jet fuel costs more than $4.50 a gallon, the same flight can lose money even with a decent load. The cheapest fix is to cancel the weakest departures and keep passengers on the remaining flights at higher fares.

That is why the cuts focus on thin routes, off-peak times and secondary markets. Fewer seats on those routes also mean fewer of the low "saver" fares that pull the average price down. Executives at all three airlines argue that fares had room to rise: Kirby, Isom and Jordan each said inflation-adjusted fares are still below or only back to 2019 levels.

The rest of the industry is moving the same way. Reuters reported that Delta chief executive Ed Bastian said airlines may need to curb growth further next year to sustain fares, and that Delta, American and Southwest all lowered their 2026 earnings forecasts. Spirit Airlines shut down earlier this year, which Reuters described as the industry's first casualty linked to the Iran war, removing a large low-fare competitor. Aircraft supply also matters: new jets such as the recently certified Boeing 737 MAX 10 use less fuel per seat, but deliveries take years to change a fleet.

What it means

For travellers, the airlines' own guidance points to higher fares through the holiday season. American expects fourth-quarter revenue up 19.5% to 22.5% and Southwest expects unit revenue up 19% to 21%, both on modest capacity growth. Those targets are only reachable if average fares stay well above last year's level. Travellers in smaller cities are the most exposed, because thin routes are the first to lose frequencies when fuel is expensive.

For the airlines, higher fares have not fully covered the fuel bill. American is guiding to a loss for 2026, and United is recapturing less than three-quarters of its added fuel cost so far. Reuters noted that the S&P passenger airlines index was down nearly 3% this year as of October 22, while the S&P 500 was up more than 13%. Third Bridge analyst Liam Dorsey told Reuters the key question is "how long consumer resiliency lasts."

The main variables to watch are the price of jet fuel and whether demand holds. United's chief commercial officer Andrew Nocella said leisure load factor fell 1.3 points, "a small amount of elasticity" from higher prices. If fuel eases, capacity tends to return more slowly than fares fall. If fuel stays near $5 a gallon, J.P. Morgan analysts quoted by Reuters said "something has to give." Refiners sit on the other side of this trade; see our coverage of Valero's third-quarter refining margins. JetBlue and Frontier are due to report results next week, which will show whether smaller carriers are cutting harder.

Frequently asked questions

Why are airfares going up in 2026?

Mainly because jet fuel costs have risen about 60% in a year. American, United and Southwest paid $3.85 to $3.92 a gallon in the third quarter of 2026 and plan for about $4.55 to $4.80 in the fourth quarter, so they are raising fares and trimming weaker flights instead of selling cheap seats.

How much have US airfares increased?

The Bureau of Labor Statistics airline fare index was 22.4% higher in September 2026 than in September 2025, compared with 3.7% inflation for all items.

Are airlines cutting flights because of fuel prices?

Yes, mostly by slowing planned growth. Southwest cut its 2026 capacity growth to about 1.2% from 1.5%, United says it will cut flights that lose money, and American expects 2027 growth to slow considerably.

Will holiday flights be more expensive this year?

Airline guidance points that way. American expects fourth-quarter revenue up 19.5% to 22.5% and Southwest expects unit revenue up 19% to 21% on modest capacity growth, which requires fares well above last year's level.