MW Airlines cut flights as fuel costs surge - an economic fallout from the Iran war that markets may be missing
By Claudia Assis and Myra P. Saefong
Fewer routes and higher fares are emerging as a ripple effect for travelers and airline profits
Airlines in Europe are already slashing flights as jet-fuel shortages start biting into global airline business
More airlines are starting to cut flights just as summer travel demand heats up, as surging jet-fuel prices squeeze margins and force tough tradeoffs.
Carriers are walking a fine line between strong demand and rising costs, and they're responding the only way they can in the short term: fewer flights.
U.S. majors United Airlines $(UAL)$ and Delta Air Lines $(DAL)$, along with national flagships such as Air Canada (ACDVF) and the Netherlands' KLM Royal Dutch $(KLMR)$, already cut flights and plan to enter the summer peak air-travel season leaner. Germany's Lufthansa (XE:LHA) said Tuesday it was cutting 20,000 flights through October.
Lufthansa and the other airlines mentioned in this report did not immediately respond to MarketWatch's requests for further comment on plans for more capacity cuts.
For investors, it's an early sign that the economic fallout from the Iran conflict may be far from over, even as markets appear to be looking past it. And while the stock market occasionally behaves as if the risks of the Iran war are mostly over, the looming threat of jet-fuel shortages in just a few months is a vivid reminder that the conflict could yet extract a toll truly global, as air travel is vital for global mobility and commerce.
The impact is already showing up in the airlines' performance and financial outlooks, raising questions about how long profits can hold up if fuel prices remain elevated for a long period.
On top of that, while President Donald Trump extended the two-week cease-fire that was due to expire Wednesday, there's still uncertainty around how new talks will proceed. U.S. traded crude-oil futures (CL00) were up more than 2% on Tuesday.
United Airlines late Tuesday cut its outlook for 2026 and cited rising oil prices as a reason for adjusting its schedule for the rest of the year, saying it expects to cut its planned growth by 5% and end the year with flat to 2% higher capacity.
"United will continue to be nimble with capacity, with additional reductions or restored flying as appropriate to meet anticipated demand," the airline said.
Alaska Airlines $(ALK)$ on Monday suspended its outlook for the year on rising fuel prices, saying fuel "remains the largest source of near-term uncertainty." Alaska said it expects its fuel to cost about $4.75 a gallon in April, from an average of $2.98 a gallon for the January-March period.
American Airlines $(AAL)$ is slated to report first-quarter earnings on Thursday before U.S. markets open. Delta Air Lines reported earlier this month, and it downplayed concerns about fuel costs.
Fuel risks are especially acute in Europe, which imports around 60% of its jet fuel from the Middle East, according to OPIS, a unit of Dow Jones, the publisher of MarketWatch.
Much of the supply flows through a region increasingly disrupted by the conflict, including the Strait of Hormuz - a key artery for energy supplies worldwide.
Jet-fuel supplies at London's Heathrow airport -one of the world's busiest international hubs - are "very, very low" and coming down rapidly, according to Paul Sankey, president of Sankey Research. At the current pace, the airport could run out of fuel by July, he warned on Monday.
Jet fuel is particularly vulnerable in a supply shock. It accounts for a smaller share of each barrel of oil than gasoline or diesel, and refineries have limited flexibility to quickly boost output.
Globally, the conflict has already removed an estimated 650 million to 850 million barrels of oil from the market, according to GasBuddy's Patrick De Haan, head of petroleum analysis.
As a result, jet-fuel markets have shifted from concern to what De Haan described as a likely supply disruption, especially in regions such as Europe that rely heavily on imports and have seen refinery capacity decline significantly.
Closer to home, U.S. jet fuel prices hovered around $2.50 a gallon in late February, and soared to nearly $5 a gallon earlier this month. Prices have recently come down to about $3.90 a gallon.
Fuel is the second-largest cost for airlines after labor, accounting for about 25% to 30% of total airline operating costs, according to the International Air Transport Association.
Airlines have been racing to upgrade fleets with more fuel-efficient aircraft, but supply constraints have slowed that effort, with order backlogs at Boeing $(BA)$ and Airbus (FR:AIR) stretching years.
-Claudia Assis -Myra P. Saefong
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April 21, 2026 18:04 ET (22:04 GMT)
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