It’s obviously an incredibly challenging time for the airline industry, given that the massive bump in jet fuel prices is massively increasing the operating costs of airlines. Airline pricing is typically pretty elastic, so simply raising fares isn’t that straightforward (if it were, so many airlines wouldn’t be running operating losses).
That being said, United has just shared some data about how fares have increased in recent times, and travelers should probably be alarmed by what executives are suggesting.
United reveals just how much it has increased fares
As of late we’ve seen consumers wonder just how much airfare has gone up and will continue to go up, given the increase in jet fuel prices. While passing on higher costs can be challenging for airlines, United seems to be having a surprising amount of luck with this. During yesterday’s Q1 2026 earnings call, executives at the Star Alliance carrier made several interesting revelations.
First, here are a couple of details that the company’s top executives revealed:
- Late in the first quarter, United implemented five price increases, along with an increase in baggage fees, which began to offset the increase in the price of jet fuel; In January and February, yields were up 4% year-over-year, in the first half of March that increased to 12%, and in the second half of March that increased to 18%
- In the second quarter, United believes it can offset 40-50% of increased fuel costs through higher ticket costs, it expects that number to increase to 70-80% in the third quarter, and 85-100% in the fourth quarter
But here’s the real reason to be concerned. United CEO Scott Kirby has acknowledged that the longer this situation persists, the more confident he is that the airline can keep most of those fare increases around, even if jet fuel prices eventually go down:
“Certainly, the longer this lasts, the higher the probability goes that the pricing increases hold. And we probably won’t hold 100% if we normalize as I told the team earlier today, and it’s just my guess that if things went back to mid-February normal, I think we get to keep 20% of the price increase next year. I think that’s going to move towards 80%. And every day, it’s ticking up longer as this goes on.”
So yeah, Kirby is saying that if things just suddenly went back to normal, they think they’d be able to maintaining a 20% fare increase, while if this goes on much longer, they can keep 80% of those fare increases.
United Chief Commercial Officer Andrew Nocella explained how these fare increases have been possible:
“Demand is hanging in there. We’ve made the appropriate capacity adjustments for United to make sure that we can get to full recovery by the end of the year, and we’re well on our way already between 40% and 50%. And — but the most optimistic thing is the fact that within a matter of seven or eight weeks, we went from yields being up 2% to 3% to yields being up 18% to 20%. It’s pretty darn remarkable.”
So yeah, the idea has been that by reducing capacity, the airline has been able to increase its yields.
You can’t blame airlines for trying to maximize profits, but…
The airline industry is a tough business, and it’s perfectly reasonable for airlines to try to recoup increases in operating costs. Many US airlines are running operating losses, and that’s not a good situation to be in. But I think there are a couple of aspects of United’s claims here that have to be called out.
First, United believes that no matter what, fare increases will largely stick around even when jet fuel prices decrease. And the longer jet fuel prices remain elevated, the better the odds that we see long term price increases. It’s not explained why that is, but it’s easy enough to read between the lines.
Obviously the belief is that the longer jet fuel prices stay high, the more airlines will go out of business or at least reduce capacity in the long run, and the less competition there will be. After all, when many airlines are operating with negative margins, we’d otherwise see United be forced to match those lower fares.
I find that reality to be especially ironic in the context of Kirby’s other comments, about how the US airline “trade deficit” is a problem, and how the US should mainly have one flag carrier. He’s really talking out of both sides of his mouth here. He says consumers want one airline they’re “proud of,” but he also actively hopes competition is reduced in the long run to be able to maintain higher fares. It’s not hard to piece those things together.
Next, I think it’s pretty remarkable how much fares actually are going up, and how airlines have been able to do that by reducing capacity. Keep in mind we’ve seen Transportation Secretary Sean Duffy argue that airlines are absorbing the increased cost of jet fuel, and that the current situation will make tickets cheaper in the long run.
As you can see, two of Trump’s biggest fans — Kirby and Duffy — are making conflicting statements here. Kirby assures investors that ticket prices will increase in the long run, while Duffy is telling the public they’ll be cheaper than ever before.
Bottom line
United Airlines claims that it increased fares five times late in the first quarter, and that it’s now able to offset around 40-50% of the increased price of jet fuel through higher ticket costs. The hope is that by the end of the year, that number is 100%.
That’s all fair enough, if the goal is simply to recoup the increase in operating costs. However, what’s more concerning is what else is being claimed — United’s CEO expects that fares will stay higher in the long run. He believes that if things went back to normal, they’d be able to maintain around 20% of those fare increases, while if this drags on, they’d be able to maintain around 80% of those fare increases. That’s not great news for consumers!
What do you make of these comments about United’s pricing in light of higher costs?
