Major U.S. airlines are signaling that steep ticket prices are unlikely to drop anytime soon, adopting a strategy of flying with fewer passengers rather than offering discounts to fill empty seats, executives said this week during quarterly corporate earnings presentations.
Airfares surged 22.4 percent in September compared to a year earlier, according to the Bureau of Labor Statistics, as carriers worked to pass along spiking jet fuel expenses to customers. Despite the steep climb in ticket prices and a slight dip in overall passenger volume, executives from American Airlines, Southwest Airlines and United Airlines indicated they plan to keep pricing disciplined to shield profit margins from surging operating expenses.
Prioritizing yields over packed cabins
Jet fuel expenses have climbed approximately 90 percent since February, when the U.S.-Israeli conflict with Iran broke out, with Gulf Coast spot prices reaching $4.63 per gallon on Oct. 20, according to U.S. Energy Information Administration data reported by NBC News. The surge represents the airline industry’s largest expense behind labor, squeezing earnings across the sector.
Instead of cutting fares to stimulate traffic, carriers are accepting lower load factors, an industry measurement of how many available seats are filled. Transportation Security Administration checkpoint data revealed that roughly 9.3 million fewer travelers were screened from April through Thursday compared to the same period in 2025, CNBC reported, marking a drop of just under two percent.
United Airlines Chief Commercial Officer Andrew Nocella said the carrier’s leisure load factor fell 1.3 percentage points in the third quarter, calling the slight decline in travelers amid elevated fares “a trade we would make every day,” according to NBC News. United Chief Executive Scott Kirby told analysts that airlines may keep focusing on yield—the revenue generated per passenger mile—at the expense of full planes to protect profitability.
American Airlines warns on pricing trajectory
Even if oil expenses soften, passengers may not see substantial relief at the booking counter. American Airlines Chief Financial Officer Devon May told the Financial Times that airfares would probably hold steady where they are right now if fuel costs ease, Fox Business reported.
“If fuel comes down, I think airfares probably stay largely where they’re at right now,” May said. “If fuel prices go up, we need to generate higher yield, we need to generate higher fares to offset that higher fuel price.”
American Airlines reported an average third-quarter fuel expense of $3.85 per gallon, which drove fuel costs up by 67.5 percent, or $1.9 billion, compared to the third quarter of 2025. The company revised its annual forecast on Thursday, projecting an adjusted loss of $1 to $1.60 per share for the year, down from earlier expectations of breaking even.
Southwest Airlines reported its average one-way fare reached $231.69 in the third quarter, a rise of nearly $50 from the previous year, excluding newly instituted fees for checked baggage or preferred seating, CNBC reported. Although Southwest passenger volume fell 3.2 percent to 33.5 million, Chief Executive Bob Jordan insisted demand remains resilient and customer numbers exceeded internal forecasts.
Capacity schedules face scrutiny in 2027
Whether carriers can sustain elevated fares into 2027 remains uncertain. Current industry data from Airlines for America shows scheduled domestic capacity increasing three percent in the fourth quarter and 3.8 percent in the first quarter of 2027. If airlines add more flights than the market can absorb, increased competition could undermine ticket pricing power.
In response, several airlines are reviewing schedules. American Airlines indicated it plans to slow its network expansion considerably next year, and Southwest has pledged not to pursue seat growth at the expense of bottom-line returns. Industry analysts and travel watchers will monitor holiday bookings closely in the coming months to see whether travelers continue to tolerate the most expensive holiday season fares in years.
