Airline profits plummet as US fuel costs nearly double

Jet fuel prices in the United States are rising sharply ahead of the peak summer travel season as escalating tensions between the US and Iran raise concerns about disruptions in the Strait of Hormuz, a critical passage for global energy shipments.

Fuel costs surged by 78 percent to nearly $6.5bn in April, following a 26 percent jump in March, according to US Department of Transportation data released on Monday.

The cost per gallon (3.78 litres) increased by $1.81 from this time last year to $4.11.

The International Air Transport Association (IATA), which represents more than 370 airlines accounting for about 85 percent of global air traffic, said in its annual report published on Sunday that net profit across the sector would come in at a combined $23bn for 2026, well below a previous projection of about $41bn and down from $45bn in 2025.

IATA said the profit margin will be “the weakest outcome since the COVID years”.

Airfares in the US have jumped 5.5 percent since the war began — 2.7 percent in March and another 2.8 percent in April — according to the US Labor Department’s Bureau of Labor Statistics, amid strains on the jet fuel supply.

“Jet fuel availability is threatened, and the price has roughly doubled since late February,” IATA said in its report.

Despite the fuel price increase, domestic flights are still being booked for the busy US summer travel season. The American Automobile Association forecast a jump in domestic travel during the Memorial Day holiday weekend, May 23-25, considered the unofficial start of summer. The group projected that 3.6 million travellers would take domestic flights.