Airlines are facing an estimated $100 billion increase in jet fuel costs this year following the Iran conflict, as disruptions to global oil flows send energy prices sharply higher and place severe pressure on already thin industry margins, according to a global airline industry body. The warning comes amid escalating economic strain across the aviation sector, with profits projected to be cut nearly in half.
The International Air Transport Association said combined net profits across airlines are expected to fall from $43 billion in 2025 to $23 billion this year, reducing average profit margins from 4.2 percent to 2 percent. The organization attributed the downturn to sustained increases in fuel costs and operational inefficiencies linked to an ageing global aircraft fleet.
The financial pressure has intensified following the conflict involving Iran, which led to the closure of the Strait of Hormuz, a key route for global energy shipments. The disruption contributed to a sharp rise in jet fuel prices, which the industry says have doubled at the height of the crisis before partially easing, though remaining significantly elevated compared with pre-conflict levels.
Willie Walsh, director-general of the International Air Transport Association and former chief executive of British Airways, said the industry was operating with “wafer-thin margins” as it absorbed the impact of rising fuel costs and constrained operational conditions. Speaking at an industry meeting in Rio de Janeiro, he said carriers were already under strain before the latest shock due to incomplete financial recovery from the COVID-19 pandemic.
The airline sector has also experienced structural weaknesses beyond fuel pricing. The bankruptcy of Spirit Airlines in 2026 was cited as an early indication of financial stress across parts of the industry, with further insolvencies considered possible if cost pressures persist. Industry executives have warned that weaker balance sheets leave some carriers particularly exposed to volatility in energy markets.
Fuel costs have been further driven up by inefficiencies in global fleets. Airlines are operating aircraft with an average age exceeding 15 years, the highest level on record, amid a backlog of around 18,000 undelivered aircraft. The industry body said delays in new aircraft and engine production have forced airlines to continue using older, less fuel-efficient models, increasing operating costs at a time of already elevated fuel prices.
Walsh said inefficiencies linked to ageing fleets contributed an estimated $11 billion in additional fuel costs during 2025 alone, with higher oil prices compounding the burden. He said the industry was experiencing “missed efficiency gains, increased maintenance and higher lease rates” as a result of supply chain constraints affecting manufacturers and engine producers.
Jet fuel prices, which had already been volatile, surged after the closure of the Strait of Hormuz, a critical passage through which a significant share of global oil exports pass. Although prices have eased from peaks as high as $120 per barrel, they remain elevated at around $93 per barrel, significantly above levels seen before the conflict began.
Despite rising costs, the industry has reported that passenger demand remains stable. The International Air Transport Association said most travellers expect fares to track oil prices, with a significant proportion indicating continued willingness to spend on travel even amid rising ticket prices. Airlines, however, continue to face pressure to pass on higher costs without suppressing demand.
Walsh also criticized delays in aircraft and engine production, urging manufacturers to address supply constraints that have limited fleet modernization. He said continued failures to deliver sufficient new aircraft risk extending inefficiencies well into the next decade, intensifying the sector’s exposure to future fuel price shocks.
