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Oil prices crashed. The Strait of Hormuz reopened. Crude fell below $75 a barrel. And your flight last week still cost nearly $1,000 for a route that was $774 in February. That gap is not an accident.
The Raw Numbers and What They Actually Mean
Start with the facts. On April 2, 2026, jet fuel hit its crisis peak: $4.88 per gallon on the US Gulf Coast. That was the moment the Iran war, the Strait of Hormuz closure, and a global refinery crunch all converged. Within six weeks of the conflict starting, jet fuel had essentially doubled from its prewar level of around $2.11 per gallon.
As of June 25, Gulf Coast jet fuel spot prices sit at $2.71 per gallon. That is a 44.4% drop from the April peak. Airlines are on track to save more than $40 billion on their annual fuel bills if these prices hold, according to Reuters calculations. So where is your refund?
It is not coming. There are several very specific reasons why.
| Metric | Crisis Peak (Apr 2) | June 25, 2026 | Change |
| Jet Fuel, US Gulf Coast | $4.88/gal | $2.71/gal | Down 44% |
| Jet Fuel Crack Spread | $80/bbl (record) | ~$57/bbl avg 2026 | Still 3x normal |
| International Average Airfare | $1,105 (May 4) | ~$980 (Jun 8) | Up 27% vs Feb |
| US Domestic Fares, Year on Year | n/a | Up 34.1% | Holding high |
| Airline Net Profit Per Passenger | $10.10 (2025) | $4.50 (2026 est.) | Down 55% |
How Bad Was the Damage to Airlines, Really?
Before writing this off as airlines being greedy, you need to understand what they actually absorbed this year.
About 23% of the world’s jet fuel exports move through the Strait of Hormuz under normal conditions. When it effectively closed on February 28, aviation got hit harder than almost any other sector. Refineries in the Gulf region that supply a massive share of Asia-Pacific aviation fuel were suddenly cut off.
The crack spread tells the real story. The crack spread is the premium jet fuel commands over crude oil. It reflects the cost of refining and distributing the finished product. Historically it sits around $20 per barrel. During the April crisis peak, it hit $80 per barrel, a record by a factor of four. In Singapore, jet fuel reached an all-time high above $230 per barrel. The IATA June 2026 Air Transport Outlook documented crack spreads averaging $57 per barrel for the full year, nearly three times the historical norm.
The numbers behind the damage are staggering. The global airline industry’s collective fuel bill is projected to jump from $252 billion in 2025 to $350 billion in 2026, a $98 billion increase in a single year. Fuel went from consuming 25.4% of airline operating costs to 31.4% almost overnight. United Airlines CEO Scott Kirby warned his airline alone could face $11 billion in extra fuel costs if prices stayed elevated.
Why Fares Went Up Slowly and Are Coming Down Even Slower
Fuel costs for airlines are locked in over time through forward purchasing and hedging contracts. When spot prices spike, you are not paying today’s price tomorrow. You are paying an average of purchases made over the past several months. The pain arrives gradually on the way up.
The same mechanic works in reverse. Today’s lower spot price does not immediately flow through to what airlines pay at the gate.
“The operational costs are now set for the next three to four months for most airlines, leaving little flexibility. It’s not a straightforward cause and effect. A 10 percent drop in oil prices doesn’t equate to a 10 percent reduction in ticket prices.”
John Grant, Chief Analyst, OAG
Deutsche Bank estimated US carriers would recover only about 60 cents for every additional dollar spent on fuel, generating $14.4 billion in higher revenue against $24.1 billion in higher costs. Alaska, JetBlue, and Frontier each said they would recover less than 40 to 50 percent of their extra fuel costs in Q2 2026. United’s Scott Kirby said his airline will not hit full recovery until year end, and even then, he expects to keep 20% of fare increases into 2027.
The Spirit Airlines Story
Spirit’s 2026 restructuring plan had modeled jet fuel at $2.24 per gallon. By early May, Spirit was actually paying $4.53 per gallon. Spirit’s own attorney told the US Bankruptcy Court this added approximately $360 million in unbudgeted Q1 costs on top of an already stressed balance sheet.
CEO Dave Davis said in the wind-down announcement on May 2: “The sudden and sustained rise in fuel prices in recent weeks ultimately has left us with no alternative but to pursue an orderly wind-down.”
Spirit is gone. Roughly 1.7 million monthly passengers are now scrambling for seats on other carriers, tightening load factors and giving legacy airlines even less reason to compete on price.
What the CEOs Are Actually Saying
Scott Kirby, United Airlines CEO
“The longer this situation lasts, the higher the probability the pricing increases hold. If things went back to mid-February normal, we’d likely keep 20% of the price increase next year. United is on track to recover 100% of its extra fuel costs through pricing by year end.”
Joanna Geraghty, JetBlue CEO
“Even if the conflict were to cease, we aren’t expecting oil prices to recover quickly. We believe it will take time for fuel prices to stabilize.”
Willie Walsh, IATA Director General
“High oil prices will inevitably mean higher ticket prices. There’s just no way to avoid that. The big unknown is how long travellers can tolerate the higher costs of connectivity.”
Michael Boyd, Aviation Consultant
“If consumers are willing to pay it, why would you lower it? If travelers are ready to pay an extra $5 to check a bag without pushback, there’s little incentive to reduce fees.”
The Pricing Asymmetry Travelers Need to Understand
Average domestic fares booked one week before travel were up 34.1% year on year as of June 8, 2026, according to Raymond James data. International fares averaged $774 per ticket in late February, surged to $1,105 by May, and were still $980 as of June 8, more than 20% above last year.
Fuel costs rose three times faster than ticket prices from January through May. Airlines absorbed a significant share of the shock. Now that fuel is falling, fares are not falling at the same rate. The mechanism that was supposed to protect passengers from fuel spikes did not fully work in either direction.
Goodbody analyst Dudley Shanley put it simply: “Unless prices fall back toward start of year levels, airlines will likely keep fares firm or push them higher where demand allows.”
In other words: you are paying more because airlines can charge more. Fuel is the reason. Demand is the permission.
What Has to Change Before Airfares Actually Drop
Four things need to happen before passengers see meaningful fare relief. None of them are close to resolved.
Jet fuel spot prices need to stay low for sustained months.
Today’s $2.71 per gallon does not help airlines whose fuel was purchased at $4.50 in April. They need time for forward contracts to roll over before savings reach ticket prices.
The crack spread has to normalize.
Even if crude falls to $70 per barrel, if refineries cannot produce jet fuel efficiently, the aviation premium stays elevated. McKinsey projects the crack spread averaging above $50 per barrel for all of 2026, versus $20 historically.
Seat capacity has to come back.
The departure of Spirit, aircraft delivery delays from Boeing and Airbus, and tight airport slots all constrain available seats. Less supply combined with stable demand gives airlines no reason to compete on price.
Budget carrier competition has to return.
Discount carriers are what force legacy airlines to lower fares. With Spirit gone and other budget operators weakened, pricing pressure from below has eased significantly.
Most analysts do not expect meaningful fare relief until early to mid 2027, at the earliest.
What This Means for the Fuel Supply Chain
This episode carries lessons that go well beyond airline passengers.
The jet fuel crisis of 2026 exposed something commodity buyers know in theory but rarely experience this directly: the price of a refined fuel product is not simply the price of the crude oil it came from.
The crack spread moved from $20 to $80 per barrel in weeks. That means even if you were buying crude at a discount, the refined product you actually needed, aviation fuel, cost four times the historical premium above crude. Watching Brent crude prices alone does not tell you what jet fuel costs. That is a supply chain risk that most procurement teams do not model.
The Gulf region supplies about 40% of the world’s jet fuel exports. One geopolitical event in one narrow waterway cascaded into airline bankruptcies, $100 billion in industry costs, and fares now 34% above last year. That is not a fringe risk. It is a structural concentration in the global fuel supply chain.
For petroleum traders and fuel procurement teams, the implication is direct. Diversified sourcing, product level pricing intelligence, and knowing your exposure to specific refining corridors are not optional risk management strategies. They are the difference between absorbing a shock and being caught completely off guard by one.
FAQ: Jet Fuel Prices and Airfares in 2026
Why are airfares still high if jet fuel prices are falling in 2026?
Airlines are using falling fuel savings to rebuild profit margins destroyed during the Iran war crisis, not to lower ticket prices. Fuel costs rose three times faster than fares on the way up, so airlines are recovering losses first. CEOs at United, JetBlue, and Southwest have all confirmed fares will stay elevated well into 2027.
How much did jet fuel prices fall from the April 2026 peak?
Jet fuel fell from a peak of $4.88 per gallon in early April 2026 to approximately $2.71 per gallon by late June 2026, a drop of roughly 44% over three months. The decline was driven by the US-Iran ceasefire and the partial reopening of the Strait of Hormuz.
What is the jet fuel crack spread and why does it matter for airfares?
The crack spread is the premium jet fuel commands over crude oil. It represents the cost of refining and distributing the finished product. Historically around $20 per barrel, it hit a record $80 per barrel in April 2026. Even as crude falls, a high crack spread keeps aviation fuel expensive and prevents fares from dropping.
When will airfares come down in 2026 or 2027?
Most aviation analysts do not expect meaningful fare reductions until early 2027. Airlines need sustained lower fuel prices, normalization of the jet fuel crack spread, and a return of budget carrier competition. None of those conditions are likely to be in place before year end 2026.
Why did Spirit Airlines go bankrupt in 2026?
Spirit Airlines shut down in May 2026 after the Iran conflict caused jet fuel to spike from their modeled $2.24 per gallon to an actual $4.53 per gallon at peak. This added approximately $360 million in unbudgeted costs in Q1 2026 alone, on top of an already stressed balance sheet.
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