However, the Financial Times notes that airlines, which raised ticket prices and service fees during this period of uncertainty, are in no hurry to lower ticket prices just as quickly. The largest airlines find themselves in a peculiar standoff: carriers are reluctant to be the first to lower fares, fearing a new price war and a drop in profits.
According to the FT, following the easing of tensions related to the conflict surrounding Iran, the cost of jet fuel has fallen from approximately $1,900 to $1,300 per metric ton. The price of Brent crude oil has also dropped to around $90 per barrel.
Risks of a Price War
Rising fuel prices in the first half of 2026 dealt a serious blow to the airlines’ bottom lines. In June, the International Air Transport Association (IATA) nearly halved its profitability forecast for the global aviation industry due to disruptions in Middle Eastern air traffic and a sharp rise in fuel costs.
According to IATA estimates, the average price of jet fuel in 2026 could have reached $152 per barrel—nearly 70% higher than the 2025 level.
Now the situation has changed: fuel has become cheaper, but airlines have the opportunity to use the reduction in costs not to lower ticket prices, but to restore their profit margins after several months of high expenses.
This is precisely why lowering fares could be a risky move. If one major carrier begins aggressively cutting prices, competitors may follow suit, which could escalate into a price war and once again put pressure on the industry’s profitability.
According to the FT, executives at companies such as Air France-KLM and Alaska Airlines acknowledge that airfares have risen but are currently preferring to monitor passenger reactions and competitors’ moves before changing their pricing strategy.
High prices have not yet destroyed demand
Stable demand remains a key factor for airlines. According to the FT, some carriers note that even a significant increase in fares has led only to a limited decline in demand.
This gives companies an additional incentive to keep prices at elevated levels. Other market participants have previously noted a similar trend. In particular, Delta Air Lines stated that it expects to maintain the fare growth it has achieved even as pressure from fuel costs eases.
At the same time, airlines continue to use another tool to support profitability: supply constraints. The international group IAG, which owns British Airways, Iberia, and Aer Lingus, recently revised its forecast for capacity growth in 2026 to virtually zero. The company attributed this to a combination of high fuel costs and weakening demand on certain routes.
Consequently, the air travel market may face a situation where the cost of the primary resource is falling, but prices for passengers remain high due to limited supply and airlines’ efforts to restore their financial performance.
Competition Could Change the Situation
However, a unified strategy to maintain high prices across the industry is not guaranteed. The FT notes that additional competitive pressure could come, in particular, from Gulf carriers, which are using more aggressive pricing strategies to attract passengers.
Furthermore, demand for air travel remains sensitive to the overall economic situation. If passengers begin to cut back more aggressively on expensive trips, airlines will have to choose between maintaining high profitability on a single flight and the need to fill their planes.
As a result, lower fuel costs do not automatically translate into cheaper airfares. In the coming months, factors such as the number of available flights, competition among carriers, and the ability of demand to sustain current price levels may become more important to consumers.
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