IATA’s $350 billion forecast for airline fuel spending points to thinner margins and higher ticket yields in 2026, while Etihad Airways CEO Antonoaldo Neves warned of fare pressure from 2027 as fuel hedges thin, Gulf News reported Nov. 12.
The International Air Transport Association (IATA) tied its June outlook to war-related disruptions in the Middle East and high fuel prices. It projected airlines would spend $350 billion on fuel in 2026, up from $252 billion in 2025. Jet fuel was forecast to average $152 per barrel and account for 31.4% of operating expenses, compared with 25.4% last year. IATA also projected the industry’s net profit margin would narrow to 2.0% from 4.2%.
In the Gulf News interview, Neves said fares could come under pressure starting in the second quarter of 2027 as airlines’ fuel hedges decline. He did not announce an Etihad fare increase or give a possible amount. Neves said airlines have limited room to pass costs on in markets where passengers have less purchasing power. “Something’s got to give,” he told Gulf News.
Fuel hedges offer only a partial buffer. IATA estimated that airlines had covered about one-third of their expected fuel use for 2026. Carriers that hedge crude oil can still face increases in the jet-fuel crack spread, the refining premium. Fuel coverage varies among carriers, as a prior EconoTimes report on differences in airline hedging showed.
IATA said airlines were raising fares to recover some of their higher fuel expenses while absorbing part of the added cost. It forecast passenger ticket yields would rise 7% in 2026, even as the industry’s margin falls.
The association said airlines offset earlier fuel shocks in 2004-08 and 2010-11 through higher aircraft use and cost discipline. It sees less room for those steps now because fleet utilization is already historically high.
