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Record Airfares Meet Record Jet Fuel as Airline Profits Lag
U.S. jet fuel prices have climbed to fresh highs, erasing much of the revenue gain carriers booked from higher fares as third-quarter earnings season opens with Delta Air Lines.
The average U.S. jet fuel price stood at $4.50 a gallon as of Thursday afternoon, according to Argus Media data published by Airlines for America. The trade group said September's average of $4.37 a gallon set an all-time high, surpassing the April average of $4.29.
Fuel costs have swung widely since the start of the Iran war and have edged higher in recent weeks as fighting in the region has intensified, pressuring an expense line that carriers cannot easily offset.
Third-quarter earnings season begins Friday with Delta Air Lines, and many U.S. carriers are expected to report record revenues. Those top-line gains, however, are largely being consumed by the surge in fuel prices.
Delta, United Airlines, Southwest Airlines and Allegiant Air appear to be among the few major U.S. carriers positioned to post a profit this year.
The result is a market where higher airfares look durable, but the pricing power behind them is not translating into stronger earnings across the industry.