According to the latest forecasts from the International Air Transport Association (IATA), the global airline industry’s trade body, airline profits will fall in the second half of this year due to jet fuel shortages caused by the war between Iran and the United States.
“War-related disruptions in the Middle East and rising fuel prices have worsened the outlook for airlines,” IATA Director General Willie Walsh said in a press release. release.
Immediately after American and Israeli airstrikes began raining down on Iran on February 28, the Islamic Republic responded by shutting down all traffic through the critical oil bottleneck of the Strait of Hormuz. The move has completely disrupted global energy trade and created a shortage of jet fuel, according to the head of the International Energy Agency.the biggest energy crisis we have ever faced.”
US airlines spent in March 2026 alone $5.06 billion for jet fuel, That’s up sharply from the $3.88 billion spent in March 2025, according to the Department of Transportation.
According to IATA forecasts, the entire global airline industry is expected to bring in $23 billion in net profit in 2026, half of the previous forecast of $41 billion and also half of the $45 billion the industry brought in last year.
“Net profit per passenger is expected to fall to $4.50, which is half of last year. Under the circumstances, that shows sustainability,” Walsh said. “But it won’t even buy you a hot dog at most FIFA World Cup venues, and it doesn’t leave much of a buffer if other costs or taxes start to rise.”
This financial crisis is likely to hit both companies and passengers.
“Unfortunately, I think there will be some carriers that will find it very difficult to cope with these high fuel prices,” Walsh said. Reuters added on Tuesday that it expects some airlines to go out of business or be bought by larger rivals.
It was the first example of this Spirit Airlines. After 34 years of operation, the budget carrier officially ceased all operations last month. Spirit has been struggling financially for some time, but high jet fuel prices have probably been the final blow.
European budget airline last month Ryanair CFO Neil Sorahan He told CNBC that “some weaker carriers that were already struggling before the war” could go bankrupt this winter due to jet fuel prices.
Airlines catering to relatively wealthier travelers, e.g United or Delta, isn’t that worried because skyrocketing fares coupled with rising jet fuel prices haven’t completely scared off their passengers from buying plane tickets. But budget airlines known for offering affordable fares acknowledge the seriousness of the threat they face. In April, a group of budget carriers, including Spirit’s former arch-rival Frontier Airlines, asked the Trump administration for $2.5 billion in aid. It was a rescue request was rejected in May.
There are three main ways airlines have responded to rising jet fuel prices: absorbing some of the costs, cutting unprofitable routes, and raising fares. All of which Walsh expects to continue shortly. Flight tickets are already available More than 20% from last year.
“Higher oil prices inevitably mean higher ticket prices,” Walsh said over the weekend. Guardian. “There’s just no way to prevent it.”
The real “big unknown,” according to Walsh, is not whether the exorbitant fares will continue, but how long air travelers are willing to put up with the higher costs.
