The war in the Middle East has caused fuel prices to surge, putting significant pressure on U.S. airlines. Fuel is the second-largest expense for airlines, accounting for about 20% of their total costs. Since the conflict between the U.S., Israel, and Iran began at the end of February, the price of Texas crude oil has risen by approximately 50%. The cost of jet fuel reached $4.64 per gallon on March 31, compared to $2.50 before the initial U.S. strikes, posing a massive challenge for the aviation industry. Facing high fuel costs, U.S. airlines are tightening their belts. Major carriers like Delta Air Lines and United Airlines could leverage this situation to gain market share. In contrast, American Airlines faces uncertainty due to long-term debt of around $25 billion. Delta Air Lines is the only airline that has managed to avoid the downward trend, as it is offsetting higher fuel costs with a projected revenue growth that exceeds expectations. Meanwhile, low-cost and ultra-low-cost carriers such as Southwest Airlines, JetBlue, and Frontier have seen their values drop by 15% to 22% over the last month. These companies are particularly vulnerable because their narrow profit margins do not allow for quick adjustments to ticket prices, which are often sold in advance. Moody's agency notes that these carriers will be the hardest hit, as JetBlue, Spirit, and Frontier were already reporting losses last year. Experts warn that if high fuel prices persist, it could lead to flight cancellations, the bankruptcy of weaker players, and a wave of mergers and acquisitions in the industry, where the strong will absorb the weak. Spanish airline Volotea has already announced flight cancellations for the summer season to ensure operational stability.
