U.S. Airfares Jump Nearly 23% as Five Airlines Add $8.8 Billion in Revenue
Key Facts
U.S. airfares rose by an average of nearly 23% year over year in the seven months through September, far outpacing the 3.6% increase in consumer prices overall during the same period, according to a Reuters analysis. In the third quarter, passenger revenue at Delta, United, American, Southwest and Alaska rose by a combined roughly $8.8 billion, or 18%, from a year earlier. That came as passenger traffic increased by less than 1%, indicating that revenue growth was driven mainly by improved ticket yields rather than a comparable expansion in passenger numbers. The figures highlight airlines’ reliance on higher pricing to protect margins against a surge in fuel costs. But company results show that revenue growth did not erase the cost impact on profits.
The rise in fares coincided with a sharp increase in jet fuel prices. Spot prices on the U.S. Gulf Coast rose from $2.43 per gallon before the war began in February to $4.63 on October 20, according to Reuters. The agency said fuel prices had climbed about 90% since the U.S.-Israeli war on Iran began in February, prompting several major airlines to cut their profit forecasts. American’s results show the scale of the pressure: its third-quarter fuel expense rose by $1.9 billion, or 67.5%, year over year. The company posted a net loss of $269 million in the same quarter under generally accepted accounting principles. Higher revenue, therefore, does not mean airlines passed the full fuel cost increase on to passengers or maintained profits.
Still, American recorded revenue growth across travel classes, with premium-cabin revenue rising 22.9% and main-cabin revenue increasing 19.5% year over year. Domestic passenger unit revenue rose 13.6%, the company said. At Southwest, operating revenue reached a record $8.4 billion in the third quarter, up 21.2% from a year earlier. Unit revenue also rose 21.6% to a record, despite an $821 million increase in nominal fuel costs. The results show broad revenue growth at both airlines, but it coincided with a higher fuel bill that limited the gains’ impact on financial performance.
Traffic indicators reveal a gap between revenue growth and actual demand. United’s leisure load factor fell 1.3 percentage points in the third quarter, a measure of the share of available seats occupied. The company’s chief commercial officer described the decline as limited elasticity amid higher ticket prices and said United was accepting that trade-off. The U.S. Transportation Security Administration screened 2.9% fewer travelers at airports nationwide during the quarter than in the same period a year earlier. By contrast, Southwest’s chief executive said higher fares had not led to a decline in passenger numbers, after the company reported that average passenger fares rose nearly 22% in the first nine months of the year. The comparison shows that pricing effects are not uniform across airlines or travel segments.
The U.S. Bureau of Labor Statistics’ airfare index rose 2% month over month in September, following increases of 2.7% in August and 2.2% in July. These consecutive gains offer consumers a more immediate context than the annual average cited by Reuters, pointing to continued fare increases through the summer months and into early fall. At Delta, the adjusted average fuel price was $3.61 per gallon in the third quarter, up 60% year over year, while adjusted fuel expense reached $4.1 billion. The figures show how higher ticket prices coincided with a steep increase in a key input for airline operations. Delta said it expects December-quarter revenue to grow about 20%, with seats increasing by less than 2%.
The next focus is airlines’ plans to increase domestic capacity, after growth remained limited in the third quarter. Six U.S. airlines plan to raise domestic capacity 3.0% in the fourth quarter of 2026 compared with the same period a year earlier, followed by 3.8% growth in the first quarter of 2027. That compares with growth of just 0.2% in the third quarter, according to Reuters. The acceleration could test airlines’ ability to sustain higher pricing as available seats expand, while fuel costs remain elevated. In trading on October 26, United shares closed at $100.69, Delta at $79.16 and American at $12.20, according to EL7 data.