High airfares could stick around even if jet fuel prices fall

Airfares may remain high even if jet fuel costs drop, according to major U.S. airlines and industry experts. Jet fuel prices surged due to the Iran war, then dipped before spiking once more during the summer. This volatility makes it difficult for airlines to forecast and justify lowering ticket prices. Despite the sharp fall in jet fuel prices, average airfares have continued to rise, with the Argus U.S. Jet Fuel Index falling from $4.88 a gallon to $2.70 in June, but airfares still remaining high.

The gap between fuel prices and ticket prices is due to airlines deciding on flight operations and ticket sales several months in advance, factoring in expected fuel costs. Airlines can't raise prices on tickets already sold if fuel prices suddenly increase. Airfares have lagged behind fuel price drops, with U.S. airfares being 23% higher than a year ago in August.

Globally, jet fuel averaged $99 a barrel in early February, but prices have more than doubled to $209 by early April, then fallen and reached $195 a barrel in mid-September. Until fuel prices stabilize, airfares may continue to be impacted by the recent spikes.