The global airline industry’s jet fuel bill will climb by $100 billion in 2026, the International Air Transport Association said Sunday, setting the stage for a staggering 50% drop in profitability.
In remarks released during the IATA’s conference in Rio de Janeiro, director general Willie Walsh said the average price of jet fuel is expected to be 70% higher year-over-year, which would drop profits from $45 billion in 2025 to $23 billion this year.
It is a “tough” time for all airlines, Walsh continued, especially those that have not fully recovered from the COVID-19 pandemic, and those operating in and around the Persian Gulf.
Still, demand remains strong, he said, and polling suggests that many airline customers expect and are prepared to pay more for travel this summer.
Jet fuel prices shot up in March after Iran effectively closed the Strait of Hormuz in response to joint air attacks from the U.S. and Israel. About 25% of all seaborne oil passes through the strait in peacetime, as well as about 20% of the world’s liquified natural gas.
The impact has been felt by airlines around the world, especially in Europe, which is heavily reliant on oil shipped through the strait, and in Asia, where many nations outside China and South Korea lack meaningful domestic refining capabilities. In the U.S., budget airlines have been especially vulnerable to price volatility due to their already narrow margins. Attorneys representing the now-defunct Spirit Airlines have said that the increased cost of fuel was the main factor in the carrier’s May 2 collapse.
But Walsh told Bloomberg Television on Sunday that airlines are not in a state of crisis, and if anything, the sector is handling recent disruptions better than could have been expected.
“I genuinely don’t believe what we’re seeing is a crisis in the industry,” he said. “I think this is going to be a bit of a challenge, but the general economic environment I think, though weaker than it had been, is still positive. Demand for flying continues to be pretty robust, to be honest with you, despite everything we’ve seen.”
Walsh also rejected the term “stagflation” for the airlines’ current situation and said signs are positive that strong demand will continue through late 2026 and into early 2027.
