Anyone planning to fly home for the holidays should prepare for a costly trip. Industry experts and major carriers say travelers may remain stuck with elevated airfares regardless of whether oil and jet fuel prices decline.
The Iran war set off the current cycle of price pressure. Jet fuel costs spiked when the conflict began, pulled back sharply in the spring, then climbed again through the summer. Fuel prices rose even more steeply than crude oil itself, a reflection of tight refinery supplies as well as higher underlying crude costs — making fuel one of carriers' heaviest operating burdens. In response, carriers eliminated some lower-margin flights and increased both ticket prices and baggage fees, though initial gains in passenger revenue offset only a portion of what fuel was costing them.
What stands out is how little ticket prices followed fuel in either direction. The Argus jet fuel index peaked near $4.88 a gallon in early April before sliding to a wartime low around $2.70 in June, yet average fares stayed high rather than tracking the drop. Bureau of Transportation Statistics data show the average fare climbed from roughly $405 in late 2025 to about $428 in the first quarter of this year and then again to about $436 through the spring.
Economists say the airline business model itself helps explain the lag. Because carriers commit to flight schedules and seat counts months before departure — and put tickets on sale even earlier — a sudden jump in fuel costs after seats are sold cannot legally be passed along to those buyers, Columbia Business School economist Brett House explained. House added that unpredictability compounds the problem: "It's not just the level of fuel costs that is a problem or a challenge for airlines. It's also the volatility."
The picture heading into the holiday travel season is grim for budget-conscious fliers. Government data showed U.S. airfares running 23% above year-earlier levels as recently as August. Travel-booking firm Hopper reported that holiday fares are at their highest point in a decade, with round-trip domestic tickets averaging about $402 for Thanksgiving and $452 for Christmas — increases of 31% and 23%, respectively, compared with the same period last year.
Carriers are cutting capacity rather than absorbing the costs. American, United, and Southwest Airlines have all announced further schedule reductions, focusing on routes with thinner margins; United pulled certain December departures and flagged possible additional cuts in 2027 if fuel remains elevated, while American acknowledged it would expand more slowly next year than previously planned. The International Air Transport Association projects that fuel will consume close to a third of airline operating expenses this year, compared with roughly a quarter in 2025.
Analysts see little relief arriving soon. Because it takes time for carriers to recover elevated fuel expenditures through pricing, passengers may continue paying inflated fares even after costs ease, and a sustained downward move in fuel prices — not just a temporary dip — would be needed before ticket prices follow. House put it plainly: "The likelihood that fuel surcharges are going to be rolled back and airfares are going to be brought down is very low over the next few months."
Whether fuel prices stabilize enough before year's end to ease the burden on carriers and the travelers who fly out of Colorado Springs remains an open question.