Airlines Adjust Fares Amid Soaring Fuel Prices
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 12 2026
0mins
Source: CNBC
- Fuel Surcharge Increase: Cathay Pacific announced it would nearly double fuel surcharges starting March 18, reflecting the pressure on airlines from soaring fuel prices due to the U.S. and Israel's attacks on Iran, which may impact consumer travel choices.
- Flight Adjustment Risks: Air New Zealand stated it would suspend its financial outlook and make initial fare adjustments if fuel markets and operating conditions remain unstable, highlighting the vulnerability of airlines in a high fuel price environment, potentially affecting profitability.
- Demand and Pricing Power: Despite rising fuel prices, United Airlines CEO Scott Kirby noted that travel demand remains strong, and if this trend continues, airlines may gain more pricing power; however, this will depend on the duration of the conflict.
- Delayed Market Response: Analysts expect airlines to face the most acute financial impact in the next 30-90 days, as they booked yields for flights assuming lower fuel prices, making it difficult to adjust fares quickly, which could lead to earnings hits in the first quarter.
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Analyst Views on ALK
Wall Street analysts forecast ALK stock price to rise
11 Analyst Rating
11 Buy
0 Hold
0 Sell
Strong Buy
Current: 36.160
Low
63.00
Averages
71.10
High
80.00
Current: 36.160
Low
63.00
Averages
71.10
High
80.00
About ALK
Alaska Air Group, Inc. is engaged in operating airlines. The Company operates through its subsidiaries Alaska Airlines, Inc., Hawaiian Holdings, Inc., Horizon Air Industries, Inc., and McGee Air Services. The Company's segments include Alaska Airlines, Hawaiian Airlines, and Regional. The Alaska Airlines segment includes scheduled air transportation on Alaska's Boeing jet aircraft for passengers and cargo. The Hawaiian Airlines segment includes scheduled air transportation on Hawaiian's Boeing and Airbus jet aircraft for passengers and cargo. The Regional segment includes Horizon's and other third-party carriers’ scheduled air transportation on E175 jet aircraft for passengers under capacity purchase agreements (CPAs). The Company serves more than 140 destinations throughout North America, Central America, Asia and across the Pacific. The Company provides freight and mail services (cargo) using both freighter aircraft and the bellies of its passenger aircraft.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Demand Challenges: The airline's capacity has been affected by unrest in Mexico and severe rainstorms in Hawaii, which together account for approximately 30% of its capacity, expected to negatively impact revenues in March and April.
- Positive Revenue Trends: Despite these challenges, managed corporate demand remains robust, with forward bookings over the next 90 days up more than 25% year-over-year, indicating a strong outlook for the peak travel season.
- Quarterly Performance Expectations: Alaska Air expects second-quarter yields and load factors to rise year-over-year, particularly in May and June, although the adjusted Q1 loss per share is now projected at $2.00 to $1.50, below the consensus of -$0.98.
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Underlying Demand Strength: Alaska Air Group has experienced a strong demand that began in the fourth quarter of 2025 and has continued into the new year.
Challenges from External Events: This demand strength has recently been challenged by several external events impacting the airline industry.
See More
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- Fuel Price Surge Impacts Fares: Fuel prices at major U.S. airports have reached $3.98 per gallon, up nearly 60% since February 28, forcing airlines to raise ticket prices to cover rising costs, with airfare expected to increase by 20% this year.
- Strong Demand Persists: Despite rising fares, airlines like Delta and American Airlines report that demand remains robust, particularly for high-end leisure travel, indicating consumers' willingness to continue flying, which may encourage airlines to maintain flight schedules in the future.
- Security Delays Worsen: An impasse in Congress over funding for the Department of Homeland Security has led to nearly 500 TSA officer resignations, resulting in security wait times exceeding three hours at major U.S. airports, negatively impacting traveler experiences and potentially reducing future travel willingness.
- Government Intervention Measures: President Trump has pledged to sign an order to ensure over 50,000 TSA officers are paid, yet the deployment of ICE officers may cause traveler unease, further affecting passenger throughput in the coming days.
See More
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- Delta Air Lines Performance: Delta Air Lines shares are down only 3% for the year, outperforming the S&P 500 despite industry challenges.
- Jet Fuel Price Impact: The airline is facing a significant 62% increase in jet fuel prices since February, which typically affects profitability.
- Industry Profit Estimates: There has been a general reduction in profit estimates across the airline industry, yet Delta's stock remains relatively stable.
- Unusual Market Behavior: The current performance of Delta's stock is noted as unusual for the airline industry, which is typically more volatile.
See More
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- Delta Air Lines Performance: Delta Air Lines shares are down only 3% for the year, outperforming the S&P 500 despite industry challenges.
- Jet Fuel Price Impact: The airline is facing a significant 62% increase in jet fuel prices since February, which typically affects profitability.
- Industry Profit Estimates: There has been a general reduction in profit estimates across the airline industry, yet Delta's stock remains relatively stable.
- Unusual Market Behavior: The current performance of Delta's stock is noted as unusual for the airline industry, which often experiences more volatility.
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