Global Airlines Warn Fuel Costs Could Bring Three to Five Years of Austerity

Global airlines are preparing for several years of financial strain after jet fuel prices climbed on the war in Iran and hopes of a quick price correction faded, industry executives said. The warnings, first aired on October 17, were taken up widely on October 18 and set out a tougher outlook for carriers in Europe and beyond: higher fares, slower expansion and fewer aircraft kept in service.

Luís Rodrigues, chief executive of TAP Air Portugal, said the sector could face three to five difficult years. He said travel demand is still present but that carriers have only limited room to keep lifting prices to cover their costs. Other airline chiefs raised similar concerns, warning that continued fuel pressure could push companies to raise ticket prices again, trim long-term growth plans and reduce the number of aircraft in operation.

Bookings hold up despite higher fares

So far, passengers have kept flying. Data from aviation information firm OAG showed 2.3 billion bookings in the first half of this year, a 1% increase from the same period a year earlier. That came even though airfares rose by more than 10% in most months of 2026 and travel was disrupted by the closure of airspace in the Gulf region.

Delta Air Lines said this month that it had seen almost no decline in demand even after raising average ticket prices by 20% this year. The strength of bookings through the first half suggests that many travelers, including those flying for work or family reasons, have so far absorbed higher fares rather than canceling plans.

Hedging cover runs out for some carriers

Part of the protection that shielded airlines from the fuel spike is now expiring. Joerg Eberhart, head of Italy's ITA Airways, said the carrier had bought about 80% of its fuel needs before the Iran crisis broke out. It did not sign additional hedging contracts, he said, leaving it more exposed to price volatility next year. Other carriers face similar timing issues as their own contracts lapse.

The bigger risk lies in passenger affordability. Higher energy prices can feed inflation, reducing real household incomes and leading people to spend less on travel. Airlines would then face high operating costs and weaker demand at the same time. Roberto Alvo, chief executive of Latam Airlines, argued that if energy prices damage the wider economy, travel demand will slow and the outlook for the whole industry will change significantly.

Carriers typically cut fares to stimulate demand when bookings weaken. With costs rising and profit margins narrowing, however, such a move could deepen financial losses. Adrian Neuhauser, chief executive of Abra Group, said the industry may end up smaller than expected as companies revise their growth plans.

What it means for airline jobs

For people working in aviation and travel, the shift points to a leaner period for airline operations. Carriers weighing new Boeing and Airbus orders against spending on other technology may delay fleet growth, which affects hiring for pilots, cabin crew, maintenance crews and ground staff. Some airlines are already moving older, less fuel-efficient aircraft to quieter routes to save fuel rather than retiring them outright, a change that alters maintenance and scheduling work. Sun Express said it would review each year whether to keep flying older planes once new aircraft arrive.

Cost control and the ability to adapt quickly are likely to decide which carriers stay competitive as fuel bills remain high, industry officials said. Executives must balance protecting passenger volumes and profit margins against the risk that household purchasing power falls further. The choices they make on fleet renewal, staffing and pricing over the coming months will shape the job market across the sector, from European flag carriers to low-cost operators and their suppliers.

What to watch next is whether demand holds once the current hedging cover runs out and higher fares reach more routes. Analysts will also track inflation figures and household spending data for signs that travelers are starting to cut back, and any new hedging deals carriers sign for next year.