Anabelle Colaco
08 Jun 2026, 21:43 GMT+10
RIO DE JANEIRO, Brazil: Airline executives from around the world are meeting in Rio de Janeiro this weekend amid growing concerns that higher fuel prices and aircraft shortages could slow the industry's recovery and squeeze profits.
The annual gathering of the International Air Transport Association (IATA), which runs from June 6 to June 8, comes as carriers confront a sharp increase in fuel costs linked to the war in Iran, as well as airspace disruptions in parts of the Middle East.
The challenges are being compounded by ongoing delivery delays from aircraft manufacturers Boeing and Airbus, forcing many airlines to keep older and less fuel-efficient planes in service longer than planned.
IATA, which represents more than 370 airlines accounting for about 85 percent of global air traffic, had forecast a record US$41 billion in industry net profit this year before the conflict escalated. Industry executives and analysts now expect that outlook to be revised lower during the summit.
A Deloitte survey of 21 airline chief executives released this week found that fuel price volatility and inflation are now the industry's biggest concerns.
"Together, they've turned what was supposed to be a record year into a fight for margin," the survey said.
Airlines are responding in different ways. Brazilian carrier Azul plans to reduce flights to better match demand as fuel costs rise, according to Chief Executive John Rodgerson.
Meanwhile, Air New Zealand CEO Nikhil Ravishankar said airlines cannot indefinitely pass higher costs on to passengers through fare increases.
"The market will respond, and demand will soften, and then you fly less," he said.
Fuel and labor remain the two largest expenses for most airlines. Fuel price spikes are particularly difficult to manage because tickets are often sold weeks or months before travel.
Long-haul routes are especially vulnerable because they consume more fuel and require greater use of aircraft and crew resources.
The key question facing airlines is how much of the additional fuel expense can be transferred to travelers without reducing demand.
So far, many carriers have benefited from resilient travel demand, particularly among premium and business travelers.
Data cited by Raymond James showed published domestic airfares in the United States remained strong as of May 25, with one-week-out fares up 35.8 percent from a year earlier and four-week-out fares up 39.4 percent.
"The willingness to pay over the past few years, crisis and no crisis, from the premium side has been really strong, and we see that strength continuing," said Alexandre Lefevre, Air Canada's vice president of network planning and global sales.
However, airlines acknowledge there are limits to fare increases, particularly in markets where consumers face economic pressures or where carriers have less pricing power.
Despite the challenges, some airlines continue to plan for expansion. Singapore Airlines is in discussions for at least 50 large wide-body aircraft, while Qantas is evaluating an order for around 20 Airbus or Boeing wide-body jets, according to a Reuters report this week.
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