Airline profits will be cut in half this year due to jet fuel shortages caused by the war between Iran and the United States, according to the latest projections from the International Air Transport Association (IATA), the global airline industry’s trade organization.
“War-related disruptions in the Middle East and rising fuel costs have worsened the outlook for airlines,” IATA Director General Willie Walsh said in a news release. release.
Immediately after US and Israeli airstrikes began raining down on Iran on February 28, the Islamic Republic shut down virtually all traffic through the critical Strait of Hormuz oil chokepoint in retaliation. The move completely disrupted global energy trade, creating a shortage of jet fuel that the head of the International Energy Agency called “The biggest energy crisis we have ever faced..”
In March 2026 alone, US airlines spent $5.06 billion in jet fuel, according to the Department of Transportation, a figure spectacularly higher than the $3.88 billion spent in March 2025.
According to IATA projections, the entire global airline industry is expected to generate a net profit of $23 billion in 2026, half of previous projections of $41 billion and also half of the $45 billion the industry generated last year.
“Net profit per passenger is expected to fall to $4.50, half of what it was last year. Given the circumstances, that shows resilience,” Walsh said. “But it won’t even let you buy a hot dog at most FIFA World Cup venues and doesn’t leave much cushion in case other costs or taxes start to rise.”
Those financial consequences are likely to affect both businesses and passengers.
“Unfortunately, I think there will be some companies that will find it very difficult to cope with this high fuel price,” Walsh said. Reuters Tuesday, adding that he expects some airlines to close or be acquired by larger competitors.
One of the first examples of this was Spirit Airlines. After 34 years of operation, the low-cost airline officially ceased all operations last month. Spirit had been struggling financially for some time, but sky-high jet fuel prices were apparently the final blow.
Last month, the European low-cost airline Neil Sorahan, chief financial officer of Ryanair He told CNBC that “some of the weaker airlines that were already struggling before the war” could go bankrupt come winter because of high jet fuel prices.
Airlines that serve a relatively wealthier group of travelers, such as United or Delta, are not too worried, as the rapid increase in fare prices that has accompanied the increase in the price of jet fuel has not entirely scared their passengers away from purchasing airline tickets. But budget airlines that are known for offering affordable fares recognize the severity of the threat they face. In April, a group of low-cost airlines, including Spirit’s former main competitor Frontier Airlines, asked the Trump administration for a $2.5 billion bailout. The ransom request was refused In May.
There are three main ways airlines are responding to rising jet fuel prices: absorbing some of the cost, cutting unprofitable routes and raising fares. Walsh expects all of that to continue in the short term. The plane tickets are already up to more than 20% from last year.
“High oil prices will inevitably mean higher ticket prices,” Walsh said over the weekend, according to The Guardian. “There’s just no way around it.”
The real “big unknown,” according to Walsh, is not whether exorbitant fares will continue but how long air travelers will be willing to tolerate the high costs.
