Airline executives have warned that the aviation industry faces several challenging years ahead as soaring jet fuel prices, driven by geopolitical tensions following the war in Iran, force carriers to raise fares, reduce fleet expansion plans, and temper growth expectations. Industry leaders describe the current elevated fuel costs as a “new normal” and anticipate that these pressures will persist for the next three to five years.

Despite concerns over rising ticket prices, passenger demand has remained resilient. Data from travel analytics firm OAG indicates that 2.3 billion flight bookings were made in the first half of 2026, marking a 1 percent increase compared to the previous year. This occurred even as fares increased by double-digit percentages year-on-year in most months, and after disruptions caused by the closure of the Strait of Hormuz, which led to significant airspace restrictions in the Gulf.

Executives acknowledge the surprising strength in travel demand but caution that this may not continue indefinitely. Fuel hedging arrangements, which have shielded many airlines from the full impact of rising energy prices, are due to expire, exposing carriers to more volatile costs next year. Joerg Eberhart, CEO of Italy’s ITA Airways, noted that while approximately 80 percent of the airline’s fuel was purchased before the crisis escalated, the company has not entered new hedging contracts, leaving it vulnerable to price fluctuations and necessitating planned fare increases.

Roberto Alvo, CEO of Latam Airlines—the largest carrier in South America—emphasized that the sector is grappling not with a decline in demand but with escalating operating costs, particularly fuel. He suggested that managing cost pressures may be more straightforward than addressing a drop in passenger numbers, but others in the industry remain cautious.

Luis Rodrigues, chief executive of TAP Air Portugal, said demand for air travel remains present but warned there are limits to consumers’ willingness or ability to absorb higher prices. Some executives expressed concern that ongoing inflation and economic strain could eventually depress demand, with one airline CEO predicting a potential “demand destruction” if households become unable to afford travel.

Overall, the industry faces a complex outlook as airlines balance robust short-term passenger interest against rising costs, geopolitical uncertainties, and the evolving financial constraints of travelers worldwide.