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.
In this post:
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?
I believe the CEO on prices over the politician.
This is certainly more plausible than the tripe coming out of Duffy's mouth.
Good luck with that hubris when the recession hits, Scott.
Quite interesting coming from United who has looming labor cost increases that are going to cut into their profits and his quest to make them number 1.
Feels like all the airlines are riding a high at the moment. Things will change. And when they do, they hurt airlines fast. Amazing how quickly people forget how this industry works during downturns
Downturn? Meh, I give it... 3.6 (months) '...not great, not terrible.'
(No, for real, we got a freaking meltdown on our hands.)
Riding high? Wait until you see all the 2nd quarter earning announcements (coming in July/August). Also, for those whining every business should sell their products for whatever price people are willing to pay. Disney just announced in 2027 tickets for Disney World will be as high as $219 a day. That won't stop the masses from going so Disney can (and should) keep raising costs. Airlines are supply/demand (provided they generate enough cash flow to...
Riding high? Wait until you see all the 2nd quarter earning announcements (coming in July/August). Also, for those whining every business should sell their products for whatever price people are willing to pay. Disney just announced in 2027 tickets for Disney World will be as high as $219 a day. That won't stop the masses from going so Disney can (and should) keep raising costs. Airlines are supply/demand (provided they generate enough cash flow to fund their operations). As long as there is an 80+%yield factor prices will remain the same or go up. That is the way it should be - these aren't charities and don't "owe" the public low prices. On the other hand all it will take is one airline to cut fares and the others will follow.
I've got all my major trips booked through February 2027 (including booking as many Hyatt stays as possible before the price reset next month). Glad I did as I'm looking at adding a weekend trip from Charlotte to Halifax in July. Lowest fare (for coach) I can find is around $700 r/t and award tickets aren't much better. I'll likely add 3-4 more trips to my plans but already see it will be much more expensive so glad I've gotten all the ones that really matter reserved.
YHZ is beautiful. Have a nice trip!
Kirby is such a POS and I loathe United even more. He thinks he’s so smart. What’s he going to do in an economic downturn? Sit there with empty planes? What an idiot.
"What’s he going to do in an economic downturn?"
Get a Brazilian waxing and visit Trump in the White House.
BAHAHA. David gets it. Skip the wax, though. Purchase knee pads and mouth wash.
Got it. So now it’s cool to refer to homosexual acts as degrading, as long as it’s someone you don’t like.
Showing your true colors.
Yeah, that's these people modus operandi. Use any slurs they can to achieve their goal. I find 1990's comment should be removed epically on this site.
Remember when Howard Lutnick shorted airline stocks right before 9/11? Remember how he was also "sick" on 9/11 and did not go into work at the towers.
Remember when Howard Lutnick did not go into the office on 9/11 to accompany his son to kindergarten? Remember his brother Gary died in the World Trade Center? I offer no opinion of the man (though being in the Trump cabinet generally isn't a positive), but I like my facts straight.
People need to revolt on prices against businesses. Stop using them. Let the cars sit on dealership lots like they are now. No more giving in to greed.
For all those that went to the Bernie Sanders School of Economics tell me the number of industries in which 90% of the goods and services do not make the business a profit. Your fare is subsidized by co-branded credit cards, despite the annoying hawking of them inflight.
Yes, credit-cards-with-wings. We know.
Now, for those that went to the trickle-down-school-of-economics... it's not rain. It's piss.
Duffy got all that knowledge from realty shows, right?
They drop prices when planes start flying half empty. they can say all they want but they don't control demand. we do. And when demand drops to other competitors, they will be forced to either drop prices again or go bust. It's a win-win for passengers.
Why do we allow this kind of behavior to constantly happen? Why is this corporate greed allowing the costs to be passed onto the consumers who, over time, won't even be able to afford airline tickets? The airline is making more than enough money, to have them do this is a betrayal to the customer.
We need to petition the government to intervene and artificially deflate prices. With prices this high, there should be a...
Why do we allow this kind of behavior to constantly happen? Why is this corporate greed allowing the costs to be passed onto the consumers who, over time, won't even be able to afford airline tickets? The airline is making more than enough money, to have them do this is a betrayal to the customer.
We need to petition the government to intervene and artificially deflate prices. With prices this high, there should be a period of deflation where we return to pre-pandemic pricing levels and everyone will be happy.
Let me get this straight. You think when a firm's costs go up, they should just eat that, lest they'd be greedy? An industry that makes no profit from actually flying should charge lower fares? You are aware that airfares prior to this year were lower, adjusted for inflation, than 20 years ago. I don't think you should be making policy decisions.
Alonzo: Used car prices have recently declined mostly as a lag due to poor new car sales. US consumers, esp in poorer states, are struggling by median standards. Post tax season refund checks, deals can be had.
Now that HA is fully integrated, AS needs to buy B6. This augments their existing AA relationship, provides the network for a new 5th national, and adds value to Mileage Plan. While B6 has debt, AS can tolerate...
Alonzo: Used car prices have recently declined mostly as a lag due to poor new car sales. US consumers, esp in poorer states, are struggling by median standards. Post tax season refund checks, deals can be had.
Now that HA is fully integrated, AS needs to buy B6. This augments their existing AA relationship, provides the network for a new 5th national, and adds value to Mileage Plan. While B6 has debt, AS can tolerate the hit with refinance, synergy, and HA level integration effectiveness.
That is false. Google "used car prices CNBC" and read the first article. Idk where you get your information from but it is blatantly false.
This is nonsense. The basic laws of supply and demand will always apply. Fares will not stay up. Never have, Never will. Nice try on Kirby's part
They won’t apply if its not possible for a ULCC to survive in the US
You need labor changes to make it possible and they’ll never come.
Given that airlines do not make money on actually flying people from Point A to Point B yes it makes sense that airlines want to increase fares. Not having the core business be profitable is a huge risk.
The question is what happens if demand falls. Do airlines park planes and keep fares up or reduce fares? My bet is that you will see capacity trimmed.
It is wild how many people, especially airline employees don’t realize they don’t make money flying.
One ruling capping interchange fees or more restrictions on credit card APRs and they’ll all be bankrupt.
See Lucky - this is all connected. Kirby and Bastian are giddily out there saying they want to raise prices as much as possible. Politically, in this environment, no government is going to let airlines like Spirit just disappear, no matter how bad the the economics are of that by the books.
A bit shortsightedness from a CEO. If things stay the same the deep recession/depression will kill demand. They think post covid bubble is here to stay.
Time will teach them and they all will run to US Govt for bail out while complaining about foreign carriers receiving subsidy.
I guess CEOs and shareholders are facing difficult times so we all have to take one for the sake of their profits, right?
I mean look at their flying economics. Fares should be much higher given their labor costs - theyre just subsidized by extorting interchange fees from small business.
Its easy to see them lose money this year due to the new labor contracts and fuel prices.
On my two most traveled short hops, United has always been 30 to 50 percent higher cash and points relative to Delta. Combine that with the lower service level.
Wow that tells you that Kirby does not care about the consumer pocket.
The best message consumers can send to him its not fly with them.
Caring about the consumer, as in wanting to let everyone fly for as little as possible.
From 2019-2025, airfares have dropped 2% while, due to inflation, the cost of everything else has gone up 25%, and that was before the cost of fuel skyrocketed.
You’re saying that’s because, during the time, airlines did that out of the goodness of their hearts and out of care for the consumers?
Kirby is talking about it,...
Caring about the consumer, as in wanting to let everyone fly for as little as possible.
From 2019-2025, airfares have dropped 2% while, due to inflation, the cost of everything else has gone up 25%, and that was before the cost of fuel skyrocketed.
You’re saying that’s because, during the time, airlines did that out of the goodness of their hearts and out of care for the consumers?
Kirby is talking about it, but the industry has raised fares.
Do you know how much fixed overhead airlines have and how barely profitable the industry is, especially compared to profit margins of 40% in other industries?
These fare increases are way overdue, even before the run up in fuel.
Yeah, I love it when corporations become successful enough to have this level of hubris. High fares are here to stay!! Yeah, says you. However, sooner or later the market will insist on bitch slapping these guys. It's called competition and I know it doesn't look good at the moment. However, there are a couple of contenders bubbling below the surface who could emerge if they play their cards right. Every time fares explode, there's...
Yeah, I love it when corporations become successful enough to have this level of hubris. High fares are here to stay!! Yeah, says you. However, sooner or later the market will insist on bitch slapping these guys. It's called competition and I know it doesn't look good at the moment. However, there are a couple of contenders bubbling below the surface who could emerge if they play their cards right. Every time fares explode, there's someone around to take advantatage and scoop up customers. This time will be no different.
Even with fares “exploding”, they are still way behind inflation, down 2% while everything else is up 25%, from 2019-2025.
These figures fall on deaf ears, happy to see the industry struggle or, at best, make single digit profit margins, as long fares remain cheap.
We want new and updated planes, and we want airlines to pay more airport costs that come from all the construction, but increased fares to help pay for all this are out of the question.
Echoing what the CEO of Virgin Atlantic said last week.
Good for Ben who gets free flights from the airlines to write reviews. Bad for everybody else.
Have used or new car prices gone down in the past 6 years? Come on, surely you guys have seen this game before.
Used EV prices have gotten great over the past few years. There are some real values to be had, same with used electronics.
Its not the same
@Alonso - car prices have increased (exponentially) due to selling PCP contracts to 80% of all buyers which inflate the price. It's nothing to do with the price of fuel, steel or rubber on the market.
The fact that you can't spell someone's name correctly when it's right on your screen just shows your low level of intelligence.
Couldn’t it also be that be expects consumers to get used to the increased prices? They’ll cut them down a bit once oil goes back down, not enough to be where they were and flyers will be happy to see them go “down”
It started with him indirectly telling his competitors to raise prices, now he’s telling them to keep prices high no matter what happens with oil.
What is that called...
"Price collusion, or price fixing, is an illegal agreement between competitors to raise, lower, maintain, or stabilize prices, stifling competition and harming consumers."
That.
This is incorrect. What he is engaging in is "price leadership," which is not illegal. It might have the same effect but one is illegal and the other is not. This is settled law.
Ahh, oh, ok, one of those 'not explicitly illegal, but clearly against the intention of the law' shades of grey... got it... cool. Cool, cool, cool, cool, cool. Let's do nothing about this. Cool.
I'm curious. If you were CEO of United or another US corporation, you're saying you wouldn't strive to maximize your profits if your general counsel advised you the steps you planned to take were legal.
Sure, David, profits whatever the cost. Burn the world down, if you must. Great plan, sir. Your shareholders, if they survive, will applaud your efforts! Huzzah!
I’m nit sure we can have the same standards for companies that have negative operating margins outside the mileage programs. There’s limited room to collude when labor collusion has put a floor on the ability to cut fares.
Goheelz, labor collusion? No. Capital and corporate greed still has outsized power here and elsewhere. I wish labor had the power you suggest. Time to rebalance the scales.
Let them eat stroopwaffle…
bet
This human trash really knows how to sell his product. Yes prices will stay up even if gas goes down which it will. Another reason not to fly United. Substandard product, human trash CEO.
What are your thoughts on fares decreasing 2% from 2019-2025 while everything else went up 25%, with all of that being before fuel prices skyrocketed.
20% fare increases don’t even catch up to where inflation through last year would be.
What are your thoughts on the struggling industry, with even the strongest ones making single digit profit margins, compared to other industries that make profits in the 40% range?
Honestly curious to hear....
What are your thoughts on fares decreasing 2% from 2019-2025 while everything else went up 25%, with all of that being before fuel prices skyrocketed.
20% fare increases don’t even catch up to where inflation through last year would be.
What are your thoughts on the struggling industry, with even the strongest ones making single digit profit margins, compared to other industries that make profits in the 40% range?
Honestly curious to hear. Does a cheap plane ticket make all of that ok? Remember, these are industry increases, not just at United. The other CEOs are thinking it, but just sticking to their corporate talking points.