United Airlines is warning travelers that ticket prices may surge by as much as 20% as jet fuel costs climb and geopolitical tensions roil energy markets. Like other major U.S. carriers, United has not hedged its fuel exposure, leaving it more vulnerable to swings in energy markets. CEO Scott Kirby said the airline’s sheer size makes it “really tough” to hedge because its trades can move the market.
The carrier expects oil to remain above $100 a barrel through 2027. It also modeled a worst-case scenario in which prices reach $175. Kirby said that trajectory could weigh on the broader economy and dampen travel demand if sustained.
The warning comes amid a sharp run-up in oil and jet fuel tied to supply disruptions and regional conflict. Brent crude has pushed past $100 per barrel following U.S. strikes on Iran. Iranian counterstrikes have effectively closed the Strait of Hormuz, a key artery for global oil shipments. The U.S. average price for regular gasoline has climbed by more than a dollar in a month to $3.77, according to The Hill.
Passing added costs to consumers
Airlines globally are facing tougher operating conditions as the price of jet fuel surged since the start of the conflict in the Middle East. Executives in Europe caution that supplies could be at risk of running out if disruptions persist. Carriers have reported hundreds of millions of dollars in additional fuel expenses. Delta Air Lines said higher jet fuel alone added up to $400 million in costs in March.
Carriers expect booking strength to support passing most of the added costs on to consumers through higher prices, according to The Wall Street Journal.