Sticker Shocked

I stared at my phone in shock. The numbers didn’t change. A simple Southwest Airlines flight from Jacksonville Florida to Baltimore Maryland cost more than $1000.

I checked United…$990 with a connection. I jumped up and down and said a few four-letter words. Outrageous. Piracy. Theft and mayhem.

That’s more than double what I expected to pay. It turns out, this is just where we are today. Airline ticket prices are up 22%+ year over year. Holiday travel for Thanksgiving is up 30%+ according to a CNN report.

I think they are underestimating it. I expected to pay $400…maybe $450 for that flight. It’s 2 hours, straight up the coast. I’ve done it four to six times per year since 2005. But I’ve never paid anywhere near $1,000 for that flight…until now.

And that’s because flights in general are near all-time highs, according to the St. Louis Federal Reserve data:

The root cause of the massive ticket inflation is jet fuel. Ticket prices roughly track the cost of jet fuel. And with the wave of destruction of refining assets in the two wars, the cost of jet fuel spiked. That has impacts in the U.S. because refiners can load jet fuel on ships and send it to markets that will pay. That drives up the cost of jet fuel here, even though we’re thousands of miles away:

Southwest Airlines (LUV), my carrier of choice because it’s direct, spent an extra $821 million on jet fuel in the third quarter, compared to 2025. That’s a 62% jump in cost for the same flights. That’s why they pass it on to us.

The four largest airlines saw a $6.3 billion increase in fuel costs, year over year. That’s $69 million a day.

In theory, the ‘official’ inflation number captures that increase. Inflation calculations include airfare, but not energy prices. So, the airlines and passengers pay massive price hikes for the same flights we did last year. But that doesn’t really get reflected in the inflation report.

And these higher prices are a challenge for both households and businesses alike. Make no mistake, these higher costs are going to be a drag on the economy. I fully expect to see fourth quarter numbers down on consumer discretionary spending.

I know my college age kids are shopping at Walmart instead of Target now. And the airlines are getting hammered in the same way. Folks aren’t flying. Delta Airlines reported a 47% decline in net income in the third quarter. They still turned a profit, but fuel costs cut it way down.

American Airlines lost $114 million in the second quarter and that grew to $269 million in the third quarter. Most of that loss came from much higher fuel costs. Even United Airlines saw its earnings fall $100 million from the second quarter to the third quarter.

Those higher ticket prices are going to blunt travel. Most Americans already locked in travel plans for the holidays this year. But if we don’t get a huge reprieve in fuel prices soon, I expect to see a massive backlash in 2027.

And it won't be limited to just airfare, either.