Air travellers hoping for a near-term drop in ticket prices following the recent US–Iran interim agreement are unlikely to see immediate relief, as structural constraints in the aviation industry are expected to keep fares elevated despite falling jet fuel costs.

Although lower geopolitical tensions have contributed to a decline in oil prices and, in turn, jet fuel costs, airlines are not expected to pass on the savings to passengers quickly. Industry analysts note that carriers are instead likely to use the improved cost environment to rebuild profit margins that were squeezed during earlier fuel price spikes.

In the US market, one of the world’s largest aviation sectors, capacity expansion remains limited due to aircraft delivery delays and airport infrastructure constraints. This has reduced the competitive pressure that typically drives down fares, allowing airlines to maintain higher pricing even as operating costs ease.

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Recent data indicate that US jet fuel prices have dropped significantly from earlier peaks, but airline fares have continued to rise faster than fuel costs in previous months. Analysts estimate that while airlines face billions of dollars in fuel expense fluctuations, they are only able to recover a portion of these costs through higher ticket prices, with recovery rates varying across carriers.

Major airlines such as Delta Air Lines, United Airlines and American Airlines are reportedly recouping only around 40% to 50% of fuel cost increases, while some low-cost carriers recover even less. Despite this, ticket prices for domestic travel remain elevated, with booking data showing a substantial year-on-year increase in average fares.

Experts attribute this trend to constrained seat growth, as US domestic airline capacity is expected to rise only marginally in the near term. Combined with fewer aircraft deliveries and reduced expansion plans among budget carriers, the risk of a broad fare war has diminished significantly.

As a result, analysts suggest that even if fuel prices remain lower, passengers are unlikely to see meaningful reductions in airfare in the near future, as airlines prioritise financial stability and capacity discipline over price competition.

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