Airlines Face a Profitability Squeeze as Fuel Costs Rise

Global airlines are heading into 2026 with a difficult equation: passenger demand remains resilient, but rising fuel costs are threatening profitability. IATA has warned that higher jet-fuel expenses could cut global airline profitability by around half, putting renewed pressure on carriers to protect route economics.

The impact could be particularly important across Asia, where airlines often operate on relatively thin margins and remain exposed to fuel-price volatility. Carriers are therefore likely to scrutinise route profitability, flight frequencies, aircraft deployment and fare structures more closely.

For the B2B travel trade, this could translate into changes in schedules and inventory availability, particularly on marginal international routes. Travel agencies and tour operators may also need to monitor fare movements more closely as airlines attempt to balance demand stimulation with higher operating costs.

The bigger picture is clear: capacity expansion will continue, but increasingly only where the economics support it. This comes alongside the wider restructuring of India’s aviation market.