Delta CEO warns higher airfare costs could last even as oil prices fall
Delta CEO Warns of Continued High Airfare Costs Despite Falling Oil Prices
Delta CEO Ed Bastian cautioned travelers on Friday that they may continue to experience higher airfare costs even as oil prices decrease from recent highs. He anticipates that this trend will contribute to boosting the carrier’s profits to meet its annual goal.
Bastian expressed his belief in the sustainability of these high ticket prices due to strong travel demand, increased seating options, and an industry that is cautious about expanding capacity too quickly when oil prices drop.
While domestic and international airfare have slightly decreased in recent weeks from peaks in April and May, consumers are still paying significantly more for tickets compared to last year. The conflict in Iran has led to a surge in jet fuel prices, resulting in higher operating costs for major airlines.
Recent data from Kayak shows that the average domestic airfare reached $366 last week, marking a 38% increase from the same period last year. Similarly, the average international ticket cost $919, a 24% rise compared to 2025 prices.
Delta has reaffirmed its full-year earnings forecast of $6.50 to $7.50 per share, expecting that airfare will remain elevated. In the third quarter, the airline anticipates earnings per share of $2 to $2.50, surpassing analysts’ expectations.
The company reported adjusted earnings per share of $1.56 in the second quarter, beating estimates, and generated revenue of $17.67 billion, exceeding forecasts.
Bastian attributed Delta’s profitability to catering to higher-income travelers in a K-shaped economy, where wealthier individuals continue to spend while lower-income groups cut back. Premium seat sales contributed $6.92 billion in revenue in the second quarter.
Delta recently introduced “basic fares” for first class and business seats, offering economy seats with select perks usually reserved for Delta members.
The airline experienced increased demand during the World Cup and a rise in corporate travel, further driving its profits. Rising jet fuel prices have prompted airlines to adjust routes, increase airfare, and raise fees for additional services.
Bastian mentioned that Delta has passed about 60% of the added costs to consumers, with plans to fully recover these expenses in the current quarter. The company saw revenue per available seat mile increase by 17% year-over-year, while costs per available seat mile rose by 21%.
Despite a 25% decrease in net income from the previous year, Delta remains optimistic about its revenue streams from sources like cargo services, a fuel refinery, and maintenance and repair operations.
