Higher-than-expected inflation numbers, including a 22% rise in airfares over the past year, were hitting airline stocks hard Wednesday.
JetBlue led the decline, falling 9.1%, with American down 6.2%, United falling 4.5%, and Delta off by 4%. Meanwhile the U.S. Global Jets ETF -- which tracks top airlines, regional carriers, travel sites Expedia and Booking.com, along with airplane makers like Boeing and Airbus -- was down 4.2%.
Airfares rose 22.4% on an unadjusted basis in September from a year ago, according to the latest inflation numbers. That's a direct result of rising fuel prices, one of the top two expenses for airlines along with labor costs.
The price of jet fuel has risen 78% since the Iran war started and 8% since the end of August, according to data from the Energy Information Administration.
Rising flight and jet fuel prices come right ahead of the busy holiday travel season. Travel site Hopper says domestic flight costs for Thanksgiving are already up 31% compared with last year, with Christmas flights rising 23% to $452 on average for a round-trip ticket.
"Months of elevated jet fuel costs due to the conflict in Iran have contributed to Thanksgiving and Christmas airfares reaching 10-year highs," Hopper economist Hayley Berg said.
That could mean pain for airlines well past the holidays as high prices lead more price-sensitive consumers to delay or cancel optional travel. As costs rise overall, that leaves less room in their budgets for pricier airline tickets. Overall inflation, as measured by the headline Consumer Price Index, rose 3.7% in September from a year ago.
Last week Delta cut its full-year earnings per share guidance, as its fuel expenses rose 62% to $4.1 billion in the third quarter versus a year ago.
JetBlue is likely getting hit hardest because it has the weakest financials among major carriers. That is driven in part by its relatively smaller share of loyalty program revenue and higher-priced offerings that have helped buffer rising costs among legacy carriers.
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