Airfares Jump 35% on U.S. Routes as Jet Fuel Costs Nearly Double

Q: With budget carriers on the brink, is the era of cheap air travel officially over?

Not entirely, but the era of reliably ultra-cheap air travel is clearly ending. This summer’s fare spike is not a normal seasonal blip. Domestic ticket prices on popular routes are up about 35% from a year ago, with overall U.S. fares rising 26.7% in May, largely because jet fuel prices nearly doubled after the Iran conflict disrupted global supply through the Strait of Hormuz. Fuel typically makes up 25% to 30% of airline costs, and carriers are now passing those costs on through higher base fares, fuel surcharges and bigger ancillary fees. Budget airlines are the most exposed. Their model depends on very low fares and thin margins, leaving little room to absorb a fuel shock. Spirit’s collapse is the clearest warning sign, and other low-cost carriers are under pressure as well. Analysts note that larger airlines have more pricing power, more premium revenue and more network flexibility, while domestic-focused discounters do not. That does not mean cheap tickets disappear altogether. Airlines will still use flash sales, off-peak pricing and unbundled fares to fill seats, and some low-cost carriers are likely to survive. But the old formula of abundant rock-bottom fares is weakening because costs are structurally higher and capacity is being cut to keep prices firm. The bigger shift is that cheap air travel is becoming less widespread and less dependable. Travelers should expect fewer ultra-low fares, more fees, and sharper price differences based on route, timing and demand.

3 articles · Updated · The New York Times · Jun 27

Skiplagged data shows popular domestic airfares booked in May for June and early July rose 35% from a year earlier, while comparable international fares increased about 15%.
Jet fuel prices have nearly doubled since the war in Iran began, helping reverse three years of airfare declines and pushing domestic summer ticket prices to their highest since 2022.
More than half of sampled domestic flights posted increases of at least 25%, reflecting tighter capacity as airlines can cut U.S. routes more easily when demand weakens.
International fares rose less despite longer flights because demand for travel to the U.S. has softened and airlines have less flexibility to quickly reshape overseas networks.