Major US airlines favor fares over fuller planes as fuel costs bite
American, Delta, United, Southwest and Alaska lifted Q3 passenger revenue nearly 18% on sub-1% traffic growth as jet fuel costs roughly doubled, NBC News/Reuters reported.
The story in focus
Major US airlines are prioritizing fares over filling seats, NBC News reported, citing Reuters. Third-quarter passenger revenue rose nearly 18% on traffic growth of less than 1%, while jet fuel prices climbed roughly 90% since February, prompting several carriers to cut earnings forecasts.
- Passenger revenue at Delta, United, American, Southwest and Alaska rose nearly 18% in Q3, with traffic up less than 1%.
- Gulf Coast spot jet fuel rose from $2.43 to $4.63 a gallon between February and October 20, EIA data showed.
- Delta and Southwest cut annual earnings forecasts; American expects a full-year loss.
- American plans to slow growth next year; United cautioned 2027 published capacity plans may not materialize.
Revenue rises without more passengers
Executives at Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group have emphasized protecting margins over growing passenger volumes, NBC News reported, citing Reuters. Across the five carriers, passenger revenue rose nearly $8.8 billion, or 18%, in the third quarter from a year earlier, while traffic increased less than 1%.
United's commercial chief Andrew Nocella said the carrier's leisure load factor fell 1.3 percentage points in the quarter, describing the decline as a trade the airline would make every day. American finance chief Devon May said its less-full planes were a deliberate result of pricing decisions. Neither executive's comments were disputed in the report.
Fuel costs pressure forecasts
Gulf Coast spot jet fuel prices rose from $2.43 a gallon before the US-Israeli war on Iran began in February to $4.63 on October 20, according to Energy Information Administration data cited by the report. Delta and Southwest have cut annual earnings forecasts, and American expects a full-year loss despite higher passenger revenue.
US air fares rose an average of nearly 23% year-on-year in the seven months through September, against a 3.6% average increase in overall consumer prices, Labor Department data showed. JetBlue initiated a $10 one-way domestic fare increase on Wednesday, JP Morgan said, following a United-led increase the previous week that Southwest matched.
Capacity is the 2027 test
Six major US airlines plan to grow domestic capacity 3.0% in the fourth quarter and 3.8% in the first quarter of 2027, up from 0.2% growth in the third quarter, according to Airlines for America, citing Cirium data. American intends to slow growth considerably next year, and United executives cautioned that published 2027 capacity plans may not materialize.
How did airline traffic compare with revenue growth in the third quarter?
Passenger revenue across Delta, United, American, Southwest and Alaska rose nearly 18% year-on-year in the third quarter, while passenger traffic increased less than 1%, according to NBC News/Reuters.
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