Airlines could save billions on jet fuel costs thanks to a temporary peace agreement between the U.S. and Iran that has driven down oil prices. However, travelers probably won't see cheaper tickets right away, since limited seat availability is allowing airlines to keep ticket prices higher than they were before the conflict.
The U.S. market offers the clearest example. Fare increases still lag this year's run-up in fuel costs, while domestic seat growth remains limited. That gives airlines leeway to use lower fuel bills to rebuild margins rather than reverse recent price increases.
U.S. jet fuel spot prices stood at $2.85 a gallon on June 17, down sharply from an early April high of $4.88. A decline of that size would cut the U.S. airline industry's annual fuel bill by more than $40 billion if sustained, according to a Reuters calculation based on industry fuel consumption.
Fares still lag fuel
As jet fuel prices surged, U.S. airlines raised ticket prices and bag fees, and cut schedules, but those steps have offset only part of the rise in fuel costs.
