Airlines are signaling a tighter holiday season for travelers. At Morgan Stanley's Laguna Conference on Wednesday, major airline executives said they are cutting flights planned for this holiday season and are likely to raise fares if oil prices stay high.
Oil prices have surpassed $100 a barrel this month, and jet fuel is $4.53 a gallon as of Thursday. The Bureau of Labor Statistics' latest consumer price index showed airfares rose more than 23% year-over-year in August.
United Airlines CFO Mike Leskinen said the carrier has already cut some routes that are on the low end of profitability and 'don't make sense in a higher fuel environment.' He also said, 'As you look into the fourth quarter, there'll be some flights in December that we won't fly that we thought we were going to fly.' If fuel remains high, he said, United will make further adjustments into the first quarter and beyond into 2027.
Southwest Airlines CFO Tom Doxey and American Airlines CFO Devon May said demand is strong, but that if high fuel prices persist, they would trim capacity and raise fares in response. Leskinen said jet fuel costs are passed through 'with a lag.' Doxey said it takes time for the higher costs to show up, but Southwest has the 'ability to recover a good portion' of those added costs.
The higher price pressure does not stop at the ticket. Sally French, a travel analyst at NerdWallet, said airlines have also increased checked-bag and seat-selection fees, and that 'the true cost of flying is higher than ever.'
For travelers, airlines are likely to target flights that are already less profitable: oversaturated markets, less-busy travel days like Saturday, and departures at less desirable times. The record demand for premium travel may also push carriers to favor business-heavy routes and long-haul international service.
One more factor is working against budget-conscious flyers: this is the first holiday season without Spirit Airlines, which shut down in May and took its low fares off the table.
The playbook for consumers is straightforward. Booking earlier can help lock in a price, and refundable fares can give you a way to rebook if prices fall. Founders know this logic well: when costs rise and supply tightens, price discipline shows up fast.
