By Callum Keown
Airline stocks have taken a hammering this week--travelers' wallets could be next.
Jet fuel prices have surged as the Strait of Hormuz remains effectively closed. U.S. jet fuel prices have climbed to around $150 a barrel, from $105 last week, according to OPIS data. Much of crude oil trapped in ships blocked near the chokepoint is medium-sour crude--which produces a higher share of middle distillates such as jet fuel, Barron's reported Thursday.
United Airlines CEO Scott Kirby said the rise in fuel prices will have a "meaningful" impact on the carrier's first quarter earnings results, CNBC reported Friday. When asked when the higher costs would start impacting airfares, he said that would "probably start quick."
Yes, the fuel price spike is obviously bad for airlines and U.S. carriers, in particular, as they don't tend to hedge fuel consumption anymore, unlike their international peers. Southwest Airlines abandoned its hedging strategy last year, while United, Delta and American did the same midway through the 2010s.
But it could also be a problem for Americans looking to book their summer vacation--or hoping to fly anywhere for that matter. Airlines will be assessing whether, and to what extent, they can pass the rising fuel costs on to consumers.
Demand is likely to be a big factor -- the stronger it is, the more likely carriers will feel comfortable raising ticket prices. "Airlines have recently provided positive updates on demand for Jan and Feb. As such, the environment is conducive for passing along fare increases," UBS analyst Atul Maheswari said earlier this week.
German airline Deutsche Lufthansa said Friday that it has seen sharp rise in long-haul demand since the weekend, particularly to and from Asia and Africa. Kirby also said demand "has not taken even a tiny step back," in his comments to CNBC.
Recent history may also sway airline executives. TD Cowen analyst Tom Fitzgerald said airlines were able to hike fares following Russia's invasion of Ukraine as supply was "still tight coming out of the pandemic and revenge travel [was] still very much in play."
Earnings estimates for the six biggest U.S. airlines plunged after the conflict began in February 2022 that year but broadly recovered by the end of the year, Fitzgerald added.
The market is already pricing in the potential impact to earnings. The U.S. Global JETS exchanged-traded fund, which tracks the performance of airlines, has tumbled more than 8% this week. Southwest and United are among the worst performers in the S&P 500 over the past four trading days, both down more than 10%. Delta is down 7%, while American has fallen 10%.
So, Americans can expect higher airfares when they book their next vacation, then?
S&P Global analysts aren't so sure. "Airfares are already relatively high, which could make it more difficult for airlines to pass on additional costs," the ratings agency's analyst Rachel Gerrish said Thursday. "This is particularly the case for North American airlines, which face a more immediate cost risk," she added.
Airline fares jumped 6% month-over-month in January, and were up 2.2% compared to January 2025, according to the latest consumer price index data.
If fuel prices keep surging, carriers may have little choice but to hike airfares. Consumers could soon be in for a shock.
Write to Callum Keown at callum.keown@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 06, 2026 09:40 ET (14:40 GMT)
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