HOUSTON – A surge in jet fuel prices could pose an “existential threat” to some airlines, lead to fewer flights and higher ticket prices, according to a new report from Deutsche Bank.
At the same time, airline leaders simultaneously warn of staffing-related disruptions during a busy travel season.
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A recent analysis provided by Deutsche Bank Research says jet fuel prices, now around $200 per barrel, are placing significant financial strain on carriers, particularly those with weaker balance sheets.
Fuel is already one of the largest expenses for airlines, accounting for roughly 30% of total costs, according to Deutsche Bank, meaning sustained increases can quickly erode profitability.
Global Conflict Driving Fuel Prices
The rise in fuel costs is being driven in part by the war in Iran, which has disrupted global energy markets and raised concerns about the stability of the world’s oil supply.
As fighting escalates, oil prices have climbed amid fears of supply disruptions in the Middle East, particularly around key shipping routes such as the Strait of Hormuz, a critical corridor for global oil transport. Roughly 20% of the world’s oil supply travels through the Strait of Hormuz.
Higher crude oil prices have translated into sharply higher jet fuel costs, creating a ripple effect across the airline industry.
“WTI [West Texas Intermediate] and Brent oil prices trading near $100 per barrel is concerning, but pales in comparison to the price of jet fuel which is currently trading around $200 per barrel,” wrote analysts in the Deutsche Bank report.
Airlines Adjusting Routes... and Price
Deutsche Bank analysts say airlines are beginning to respond to higher fuel costs by cutting capacity.
“Capacity cuts are not a matter of ‘if,’ but ‘when,’” the report states.
Early reductions are expected to include:
- Late-night and early-morning flights
- Midweek service, including Tuesdays and Wednesdays
- Off-peak and seasonal routes
For Houston-area travelers, that could mean fewer flight options, particularly during less busy travel periods.
Rising costs are also being reflected in ticket prices.
According to a Deutsche Bank pricing analysis, airfare has been volatile in recent weeks, particularly on international routes.
- Transatlantic fares reached about $1,323, rising nearly 30% in one week
- Transpacific fares climbed to roughly $1,583, with double-digit gains
Other regions showed significant swings, suggesting airlines are adjusting prices rapidly in response to changing demand and fuel costs.
The report notes that airlines historically pass higher fuel costs on to passengers, typically with a delay of about two months.
Not all airlines are expected to be affected equally.
According to Deutsche Bank, full-service carriers, such as United and Delta, may be better positioned to offset higher costs because a large share of their revenue comes from premium seating, corporate travel and loyalty programs, which tend to be less sensitive to price increases.
Low-cost carriers, which rely more heavily on price-sensitive travelers, may face greater difficulty raising fares without reducing demand.
If fuel prices remain elevated, the report suggests prices and routes won’t be the only impact on airlines.
Some older, less fuel-efficient aircraft could be grounded, and certain long-haul routes may become less economically viable.
Smaller aircraft could be impacted here, too. They typically service smaller airports in less populated regions, meaning the potential for less travel options for rural markets.
Airline CEOs Press Congress
At the same time, airlines are facing another problem: the Department of Homeland Security federal funding lapse that’s leaving TSA agents unpaid and calling out of work.
Airline executives are raising concerns about operational disruptions tied to federal staffing.
In a joint letter dated March 15, the CEOs of major U.S. airlines, including United Airlines, Delta Air Lines, American Airlines and Southwest Airlines, urged Congress to ensure federal aviation security workers are paid during government shutdowns.
The letter, also signed by leaders of JetBlue, Alaska Airlines, UPS, FedEx and other aviation companies, calls for legislation to guarantee pay for Transportation Security Administration officers, air traffic controllers and customs agents.
“TSA officers just received $0 paychecks. That is simply unacceptable,” the executives wrote.
Airline leaders warned that travelers are already experiencing delays, citing reports of two- to four-hour wait times at airport security checkpoints. Houston is no stranger to those incredibly long wait times.
At Houston’s William P. Hobby Airport, wait times in weeks prior extended well beyond two hours to be screened by security staff.
Additionally, the Department of Homeland Security told KPRC 2 that 55% of TSA agents scheduled to work this past Saturday called out sick, the highest number since the start of the federal funding lapse.
According to statistics provided by the Department of Homeland Security, Houston area airports have seen “unscheduled absence” rates above 30% on at least five days during the shut down. Less agents working equates to longer lines.
Prior to the shutdown, that rate was under 2%.
“Now, 366 TSA officers have left the force. Because of this DHS shutdown, Americans are facing HOURS long waits at airports across the country. Democrats must reopen DHS now,” said Department of Homeland Security Acting Assistant Secretary Lauren Bis.
The concerns come as airlines prepare for a surge in passengers for nationwide events like the 2026 World Cup.
According to the letter, U.S. carriers expect 171 million travelers during the spring season, which would set a record.
That demand is expected to be felt in Houston, where Bush Intercontinental Airport serves as a major hub for United Airlines and Hobby Airport is a key base for Southwest Airlines.
“With spring break travel in full swing … the stakes are especially high,” the letter states.
How This Impacts You - The Customer
The combination of rising fuel costs and staffing concerns could have a direct impact on travelers’ wallets and plans in the coming months.
Airlines typically pass higher fuel costs on to passengers, often with a delay of about two months, according that report from Deutsche Bank.
That means fare increases tied to the recent surge in jet fuel prices may continue to show up into late spring and early summer.
Recent pricing data already suggests volatility.
At the same time, airlines are expected to reduce less profitable flights as costs rise, which can limit seat availability and push prices higher, especially on peak travel days.
For consumers, that combination, higher costs and fewer flights, could make last-minute bookings more expensive and less predictable.
Travelers may benefit from booking earlier than usual, particularly for international trips or peak travel periods, as airlines adjust prices and schedules in response to rising fuel costs.
For Houston-area travelers, the effects could be more noticeable on long-haul and international routes out of Bush Intercontinental Airport, where fuel costs play a larger role in ticket pricing. However, expect to pay higher than normal for flights until the conflict in Iran ends and possibly a few months after, too.