Airline Costs Are Dropping, But Not For Us

David J. Danto

Travel thoughts in my own, personal opinion

eMail: ddanto@IMCCA.org Follow Industry News: @NJDavidD on

Airline Costs Are Dropping, But Not For Us July 2026

I hate saying I told you so. Actually, that is not completely true. I enjoy it tremendously when I can accurately predict the future. I just wish I were wrong more often when the subject is business travel pricing.

When the conflict around the Strait of Hormuz first pushed fuel prices higher, I wrote that airfares would go up quickly and then, in the usual airline tradition, somehow forget how to come back down. The airlines would blame fuel, blame uncertainty, blame geopolitics, blame capacity, blame anything with a pulse. Then, when the underlying cost pressure eased, the pricing would remain right where it was.

That is basically where we are now.

According to reporting citing Deutsche Bank, jet fuel prices have fallen sharply from their wartime spike. Fuel may be materially cheaper for the airlines, but the passenger experience has not changed much at all. Fares remain elevated, and the reasons are painfully familiar: carriers cut routes, did not restore enough capacity, pushed through repeated fare hikes, and benefited from the loss of Spirit Airlines as a meaningful low-cost pressure point in many markets.

In other words, the emergency pricing became the new pricing.

This is one of the oldest tricks in travel economics. When costs go up, the increase is passed through quickly and dramatically. When costs go down, the savings become “margin recovery,” “capacity discipline,” “network optimization,” or whatever other phrase sounds better on an earnings call than “we are keeping the money.”

Business travelers already know this game. The airlines spent the last few years teaching customers that less can cost more. Fewer flights. Fewer nonstops. Fewer seats available at reasonable prices. Fewer low-cost competitors. More fees. More complexity. More paid upgrades. More branded fare bundles designed to make the old basic product look like a premium experience.

The fuel spike simply gave the industry another reason to raise prices. The fuel decline has not given passengers a reason to see relief.

That should matter to corporate travel managers because this is not just a vacation-season annoyance. It is a budgeting issue. If summer leisure demand holds, airlines have little incentive to give back pricing power. If fall demand softens, they may discount selectively, but that does not mean the broader fare structure resets. Airlines have become very good at controlling supply rather than chasing volume. They would rather operate fewer flights at higher yields than flood the market and compete aggressively on price.

Case in point: I just priced out a December trip to Las Vegas from Newark for another conference. The lowest non-stop fare on United shows at a reasonable $407. But when one peels back that fare, it is for Basic Economy, the stripped-down product that does not include normal seat selection, changes, or much else. That price moves to over $600 when a normal fare is selected, roughly double what that trip should cost. And for that extra cash, United stopped flying the 739s / 757s on that route, so no more convenient mid-cabin lavatories to and from Las Vegas.

That is great for airline investors. It is lousy for anyone trying to manage a travel budget.

The loss of Spirit makes this worse. Love it or hate it, Spirit kept pressure on the market. Even travelers who never flew Spirit benefited from its presence because its fares forced other airlines to respond. Remove that pressure, and the “competitive” fare from a legacy carrier starts to look a lot less competitive. The market does not need every traveler to choose the low-cost carrier. It only needs the low-cost carrier to exist.

Now, on many routes, that pressure is weaker or gone.

So yes, jet fuel is down. But the fare environment is not. That tells us something important: this was never only about fuel. Fuel was the excuse, capacity was the mechanism, and reduced competition was the gift.

For business travelers, the lesson is simple. Do not assume fares will normalize just because the headline cost driver has eased. Build budgets around the market we actually have, not the one we think should exist. Book earlier where possible. Watch nonstop premiums. Recheck fares after booking if your company tools allow it. And be very careful about assuming that a temporary shock will produce temporary pricing.

Airlines have learned that passengers will absorb a lot of pain before changing behavior. They have also learned that corporate travel often has to happen regardless of price. That gives them confidence to hold the line.

The phrase “fuel surcharge” always sounded temporary. The pricing behavior behind it rarely is.

So, unfortunately, this is the part where I get to say it: I told you so. The airlines got their fare hike. The fuel prices came down. The passengers are still paying.

Shocking, I know.

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This article was written by David Danto and contains solely his own, personal opinions.

All image and links provided above as reference under prevailing fair use statutes.

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As always, feel free to write and comment, question or disagree. Hearing from the traveling community is always a highlight for me. Thanks!