Southwest CEO indicates that flight prices may stick after Iran conflict spiked fuel costs

Airline pitchy substance prices volition yet travel down, but that doesn’t mean the outgo of flights will, according to Dallas-based Southwest Airlines’ main executive.

Speaking astatine Bernstein’s 42nd Annual Strategic Decisions Conference connected Thursday, Southwest CEO Bob Jordan said successful prepared remarks: “I deliberation we — our web competitors, you tin tell, we’re each focused connected ratable accumulation of results, dependable accumulation of results, sustainable margins.” He continued, “And truthful I bash deliberation that produces a backdrop wherever we’ll — there’ll beryllium — we’ll surely not effort to springiness immoderate of these fare increases back.”

Aircraft substance and lipid are immoderate of the biggest expenses for airlines, according to published statistic from World Air Transport — comprising astir 29% of each costs and “highlighting the important interaction of substance prices connected operational expenses.”

Jordan said that the aviation manufacture has had 7 consecutive fare increases since Feb. 1, acknowledging that Southwest had “participated successful each of those.”

“That’s the astir that I could retrieve successful my 38 years successful the industry, but with fares up though that much, there’s been nary driblet disconnected successful astatine all,” helium said. ‘So nary denotation that the user is elastic successful the spare environment. So leisure concern crossed geographies, crossed each points successful the booking curve, the user remains precise beardown contempt this emergence successful fares.”

Airline fares roseate astir 21% successful the past year, according to the U.S. Bureau of Labor Statistic’s Consumer Price Index Summary published earlier this month.

And Jordan seemed to bespeak that further fare increases whitethorn beryllium successful store for customers.

“If you conscionable took today’s gross situation oregon output situation and you — and you took substance prices arsenic they are today. No, no, it’s not close,” Jordan said successful effect to a question astir whether Southwest tin screen the pitchy substance terms hike “at the latest circular of fare increases.”

“So you inactive — you request further increases to afloat screen the emergence successful substance this far.”

Southwest operates a robust way web from Dallas, the institution being based astatine Love Field. It operates 18 of the 20 gates astatine the airport.

Jordan’s comments travel conscionable implicit a period since his hose reported grounds first-quarter operating gross of $7.2 cardinal and nett income of $227 million. Southwest antecedently said it assumed substance volition outgo betwixt $4.10 and $4.15 per gallon for the 2nd 4th of 2026, arsenic airlines proceed to reel from the interaction of the ongoing warfare with Iran that has closed the Strait of Hormuz.

Jordan appeared to person a affirmative concern outlook connected substance prices’ interaction connected Southwest’s business, saying “I’m becoming progressively bullish that we volition beryllium capable to screen these substance increases with gross increases.”

Fare increases aren’t the lone mode airlines person tried to grapple with the summation successful pitchy substance prices. Southwest, Fort Worth-based American Airlines and different large carriers person hiked checked container fees successful caller months amid the Iran conflict.