Fuel eats 31 percent of airline costs as engine bills jump 5.7 billion USD

Fuel remains the single largest cost item for airlines. IATA's 2026 forecast projects carriers will spend 350 billion USD on it, representing 31.4 percent of total industry costs, which the association estimates at 1.117 trillion USD. The forecast assumes jet fuel at 152 USD per barrel, up from 90 USD in 2025. Brent crude is expected to average 95 USD per barrel, compared to 69 USD a year earlier.

Fuel is the primary driver behind the divergence in revenue and cost growth. Total industry revenue in 2026 is projected to reach 1.165 trillion USD, a 9.4 percent increase from the previous year. However, expenses are rising by 13.0 percent. This gap impacts the bottom line: airline net profit is expected to fall from 45.0 billion USD to 23.0 billion USD, while the net margin drops from 4.2 percent to 2.0 percent.

Engines: 5.7 billion USD in extra costs

Engines are the second area where carriers seek savings. IATA notes that a ruling by the European Commission's Directorate-General for Competition in the Pratt & Whitney Canada case added approximately 5.7 billion USD to airline bills for engine leasing and servicing in 2025.

Earlier that same year, IATA renewed its agreement with CFM International regarding aftermarket servicing practices. The deal aims to increase competition across the entire portfolio of CFM commercial engines. It allows independent service providers to bid for tenders and supports the use of all parts and repair variants approved by regulators.

IATA states that greater competition and more options for parts and repairs are measures that can alleviate this cost pressure. The organization represents over 370 airlines, speaking for the majority of the global passenger transport market.

What it means for the ticket price

IATA's forecast indicates that higher fuel prices do not automatically translate to higher fares for passengers. Carriers pass on only a portion of the increase to customers. IATA assumes real growth in revenue per passenger kilometre of 7.0 percent and growth in total unit revenue of 7.5 percent, alongside a 13.0 percent rise in costs. The industry's financial result absorbs the difference, shrinking by nearly half in 2026.