{"id":756689,"date":"2026-07-11T12:43:25","date_gmt":"2026-07-11T12:43:25","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/756689\/"},"modified":"2026-07-11T12:43:25","modified_gmt":"2026-07-11T12:43:25","slug":"delta-gloats-to-investors-that-higher-fares-are-sustainable-even-as-oil-gets-cheaper","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/756689\/","title":{"rendered":"Delta Gloats To Investors That Higher Fares Are Sustainable, Even As Oil Gets Cheaper"},"content":{"rendered":"

In recent times, we\u2019ve seen the cost of airfare increase massively<\/a> \u2014 according to data, in the United States, the average increase has been around 30% over five months. Admittedly a major reason for the fare increases is how much jet fuel has gone up in cost, due to the war with Iran, which doesn\u2019t seem to be ending any time soon.<\/p>\n

However, one thing has become clear \u2014 airlines are using this as an opportunity to try to improve their long term prospects, by permanently introducing fare hikes\u2026 well as, permanent as anything in the industry is. Delta executives have today directly acknowledged that.<\/p>\n

Delta CEO admits fares will stay high regardless of fuel costs<\/p>\n

Delta is the most profitable airline in the United States, and the carrier is also always the first to release its earnings results. The airline has today announced its Q2 2026 performance<\/a>, and the results are strong, despite the headwinds that the company has faced.<\/p>\n

Comparing results to the same quarter last year, revenue grew by a staggering 14%, while capacity only increased by 1%. Seeing year-over-year double digit revenue increases is pretty impressive in an industry like this, especially when it\u2019s not due to growth.<\/p>\n

To break that down a bit more, we saw a 17% increase in premium revenue, and even an 8% increase in economy revenue. Economy revenue growth has otherwise been a struggle in recent times, so that\u2019s a reflection of how airlines have been able to sustain fare increases, even among more price sensitive customers.<\/p>\n

But I think what\u2019s even more interesting is what Delta CEO Ed Bastian said during the earnings call. He said that increased fuel costs have \u201cproven to be the most powerful catalyst for change in our industry,\u201d and he means that in a positive way.\n<\/p>\n

He pointed out how most airlines in the United States \u201cwere already struggling to earn their cost of capital against a backdrop where industry airfares have meaningfully trailed inflation, costs have reset higher, and consumer preferences have evolved.\u201d<\/p>\n

But he added how \u201cstructural change has accelerated, enabling the industry to recapture this year\u2019s fuel cost inflation at the fastest pace of any recent cycle,\u201d indicating that \u201cwe believe current revenue momentum should remain sustainable even if fuel prices moderate.\u201d He referred to this as \u201can important step towards improving the industry\u2019s financial health and earning sustainable returns over time.\u201d\"\"Delta expects fare increases to stick around long term<\/p>\n

Are airlines being overly optimistic with higher fares?<\/p>\n

In fairness, what Bastian said here wasn\u2019t surprising. In early April I already covered how he said that fares may not decrease even if oil prices go down<\/a>, but now we have more data to actually back up how performance has evolved. For that matter, this matches exactly the narrative we\u2019ve heard from United executives<\/a> as well.<\/p>\n

They\u2019re absolutely telling the truth here, in terms of how airlines are approaching this \u2014 the only lie was when Bastian recently suggested<\/a> that fares will only go down when our air traffic control system is fixed.<\/p>\n

Here\u2019s the truth of the matter, as I see it:<\/p>\n

The cost of airfare isn\u2019t based on the cost of providing the seat, but instead, it\u2019s based on supply and demand, and trying to maximize incremental revenue; demand is based on macroeconomic factors, while supply can be controlled by cutting some flightsSeveral major US airlines haven\u2019t turned a profit in years, since airline profitability is increasingly tied to credit card revenue, which puts little airlines at a major disadvantageOf course Bastian almost makes it sound like he\u2019s approaching increased fares in an altruistic way, looking out for the airlines that aren\u2019t covering the cost of capital, when in reality, his hope is to make \u201chis\u201d airline, which has good margins, even more profitable<\/p>\n

What I find interesting is that we haven\u2019t actually seen capacity in the US market decrease that much. It\u2019s almost like all the airlines have a \u201cwink wink, nudge nudge\u201d agreement to keep fares higher right now. I don\u2019t want to suggest anything illegal is happening, or that this is official collusion, but I think the concept isn\u2019t too far off.<\/p>\n

However, eventually I feel like something has to give. Ultimately the way fares end up going down is because you have desperate airlines with seats to fill, and if they can undercut the other guys, those airlines often feel the need to match fares as well.<\/p>\n

For airlines like Frontier, it\u2019s not necessarily just about being profitable, but instead, it\u2019s about reducing losses. If we see some airlines consistently undercutting fares of competitors, then the increases just won\u2019t be able to stick around, as I see it.<\/p>\n

I\u2019m actually a little more forgiving than others of airlines raising fares, because I recognize what a tough industry it is. Many people just don\u2019t realize how expensive it is to run an airline, and act as if they\u2019re being taken advantage of if their flight across the country costs more than their Uber to the airport.\"\"There will always be competitors trying to undercut fares<\/p>\n

Bottom line<\/p>\n

Delta has today reported its Q2 2026, and the airline saw a very healthy 14% revenue increase, largely attributed to being able to charge higher fares. While those higher fares make sense in the context of the spike in jet fuel costs, it\u2019s the long term narrative to investors that has the biggest implications for consumers.<\/p>\n

Delta CEO Ed Bastian indicated that the current conflict has been a \u201cpowerful catalyst for change\u201d in the airline industry, and that the \u201ccurrent revenue momentum should remain sustainable\u201d even as jet fuel prices go down.<\/p>\n

This is a narrative we\u2019ve heard echoed over and over by airline executives. While I know that this is how they\u2019d like things to be, I\u2019m curious to see how it really plays out.<\/p>\n

What do you make of Bastian\u2019s comments about long term airline ticket prices?\t<\/p>\n","protected":false},"excerpt":{"rendered":"In recent times, we\u2019ve seen the cost of airfare increase massively \u2014 according to data, in the United…\n","protected":false},"author":2,"featured_media":756690,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[28],"class_list":["post-756689","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/756689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=756689"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/756689\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/756690"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=756689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=756689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=756689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}