Jet fuel volatility driven by Middle East conflicts is eroding airline margins worldwide, with 2026 EBIT forecasts declining by 1.7 percentage points due to sustained high prices. Carriers face rapid cost surges outpacing revenue adjustments, pushing operating margins toward zero.
IBA analysis highlights elevated jet fuel prices as a primary pressure on global profitability, compounded by supply disruptions from reduced traffic through the Strait of Hormuz. IATA notes that sudden price shocks, rather than high levels alone, amplify risks by hindering quick pass-through to fares.
Delta Air Lines anticipates over $2 billion in extra fuel costs for the June 2026 quarter. American Airlines projects $580 million in added first-quarter expenses, while United Airlines plans route cuts through 2027 to safeguard margins.
Chinese carriers Air China and China Southern raised domestic fuel surcharges in April 2026: $12 AUD for routes under 800 km, $25 AUD for longer ones. Cathay Pacific hiked surcharges 34%, Air New Zealand suspended profit guidance after fare increases, Scandinavian Airlines will cancel 1,000 April flights, and Japan Airlines with All Nippon Airways eye sharp international hikes from June.
Fuel hedging offers some protection by curbing volatility exposure, though it cannot fully offset geopolitical shocks impacting airlines’ second-largest cost.