Why are flights so expensive right now? Start with the fuel. On October 20, jet fuel on the US Gulf Coast cost about $4.63 a gallon, according to the US Energy Information Administration. A year earlier, it averaged around $2.15. That's roughly double, and over the past few weeks America's biggest airlines have laid out, in their own earnings reports, exactly how that's flowing into your ticket.
How We Got Here
The jump started in late February, when US and Israeli strikes on Iran and Iran's retaliation sent energy markets into a spin. Closed airspace across the Middle East forced flights onto longer routes, and fears about shipping through the Strait of Hormuz pushed prices higher still. By June, the International Air Transport Association, the global airline trade group, said jet fuel prices had roughly doubled since late February. It also pointed to an unusual twist: the gap between the price of jet fuel and the price of crude oil hit a record, which means airlines are paying even more than oil prices alone would suggest.
For airlines, fuel is usually the second-biggest cost after staff. IATA now expects it to make up more than 31% of airline costs worldwide this year, and it forecasts the industry's profits will be cut in half.
Airfares · Fuel
What Airlines Paid for Fuel, and What You're Paying Now
Contrail
What the Airlines Just Told Investors
The latest quarterly earnings, covering July through September, show the hit in plain numbers. American Airlines paid $3.85 a gallon for fuel, up from $2.37 a year earlier, and fuel's share of its operating costs jumped from about 20% to nearly 29%. The airline posted a loss for the quarter. Delta paid $3.61 a gallon, up from $2.25, and cut its full-year profit forecast sharply. Southwest's fuel bill rose 62%.
The bigger warning was about what comes next. American is planning for fuel around $4.70 a gallon this winter, and United expects about $4.80, both well above what they paid this summer. Delta expects to pay less, around $4.25, partly because it owns its own oil refinery, which saves it about 40 cents a gallon.
Where It Shows Up in Your Fare
Airlines have been passing the cost on. US airfares in September were up 22.4% from a year earlier, according to the government's consumer price index. Southwest said its average fare rose nearly 27%.
The holidays look especially expensive. The fare-tracking app Hopper puts the average domestic round trip at $402 for Thanksgiving, up 31% from last year, and $452 for Christmas, up 23%. Airlines have also reportedly trimmed some holiday flying, which leaves fewer seats to go around. Hopper's advice is to book before Halloween.
Why Europe Could Be Next
There's a reason many European airlines have been better protected so far, and it's about to run out. Many European airlines lock in fuel prices months or years ahead, a practice called hedging. Lufthansa had 86% of its 2026 fuel locked in, for example. US airlines mostly don't do this anymore. Southwest, long famous for it, ended its hedging program last year.
That's why American fares moved first. But those European protections shrink sharply in 2027. Lufthansa has just over half of next year's fuel locked in, and Ryanair, which has fuel locked at about $67 a barrel through March, will be about 85% exposed to market prices after that. Ryanair's CEO, Michael O'Leary, said on October 20 that European fares will rise "by 10, 15, maybe 20%" next year, which he called the biggest increase in the history of European airfares.
What It Means for Your Plans
If you're flying in the US for the holidays and haven't booked, the numbers say sooner is better. For summer 2027 in Europe, it's worth booking earlier than you normally would, before the hedges roll off and fares catch up. And if a fare looks reasonable now, it's probably not worth waiting for fuel to fall. The airlines themselves are planning for it to get more expensive, not less.
