Fuel Shock and Capacity Cuts
The conflict in Iran has triggered a sharp spike in jet fuel prices, nearly doubling since late February, disrupting global flight operations and increasing operating costs across the airline industry. Despite these pressures, resilient travel demand in the U.S. has allowed carriers to raise fares, partially offsetting higher expenses.
Kirby confirmed that United will cancel about three percentage points of off-peak flying in the second and third quarters, targeting midweek, overnight, and Saturday services with weaker demand. The airline will also reduce capacity at Chicago O’Hare by roughly one percentage point and maintain suspensions of flights to Tel Aviv and Dubai. Altogether, these adjustments account for an estimated five-percentage-point reduction in planned 2026 capacity. United expects to restore its full schedule by the fall.
“There's a good chance it won’t be that bad,” Kirby wrote regarding fuel forecasts. “But...there isn’t much downside for us to preparing for that outcome.” He emphasized that the airline would rather leave some demand unmet than operate unprofitable routes under sustained high fuel prices.
Fare Increases Provide Cushion
U.S. airlines, including United, have relied on strong consumer demand to mitigate the impact of rising fuel costs. The carrier has implemented fare increases twice this year, averaging about $10 per ticket, with further 5% to 7% hikes possible. According to Melius Research, fares booked over the past week have risen 15% to 20%, reflecting robust early-year demand.
Rival carriers, including Delta Air Lines, have also indicated flexibility to trim capacity if high fuel costs persist. Unlike many European and Asian carriers, most U.S. airlines do not hedge fuel prices, making fare adjustments and selective capacity reductions critical tools to manage profitability.
Long-Term Growth Remains a Priority
Despite the short-term retrenchment, Kirby stressed that United’s long-term expansion strategy remains intact. The airline plans to take delivery of roughly 120 new aircraft in 2026, including 20 Boeing 787 jets, with an additional 130 aircraft scheduled through April 2028.
Unlike previous downturns, United will not furlough staff or defer capital investments in response to higher operating costs. Kirby emphasized that maintaining growth and operational momentum is key, even amid volatile fuel markets and geopolitical uncertainty.
The airline’s approach highlights a broader industry trend in the U.S., where carriers balance capacity discipline with strong pricing power to navigate an unprecedented fuel shock while keeping long-term expansion plans on track.