U.S. airlines are hiking fares - and travelers keep booking

Key Points:

• Jet fuel prices have surged due to the Strait of Hormuz closure following attacks on Iran, increasing airline costs by over $6 billion this year, but travelers continue to fly despite higher fares.
• In March, travel-agency ticket sales rose 12% year-over-year to $10.4 billion, with domestic trips up 5% and international trips up 1%, reflecting resilient consumer demand amid rising ticket prices.
• Major U.S. airlines like JetBlue, American, Delta, and United expect to pass higher fuel costs onto customers by early 2027 or sooner, with revenue growth forecasts for the second quarter ranging from 11% to 16.5%.
• Low-cost carriers, which have fewer premium seating options, are struggling with fuel cost increases and are seeking $2.5 billion in government relief, highlighting a divide in industry profitability.
• Analysts suggest that even if oil prices fall, jet fuel prices may remain high due to refining and transportation costs, potentially keeping airfares elevated and supporting airline earnings growth if demand remains steady.