Pricing power is back: what the 2026 aircraft market means for airline marketing

On 27 October, Cirium Ascend Consultancy and Bloomberg Intelligence held a joint webinar on aircraft values and build rates as 2026 draws to a close. George Dimitroff of Cirium Ascend Consultancy covered capacity, fleets, production and asset values. George Ferguson of Bloomberg Intelligence covered airline margins, fares and schedules.

The webinar targeted the aircraft finance community. Its data, though, tells a story that matters just as much to commercial and marketing teams. For the first time since the post-Covid rebound, airlines are setting prices in a market where they can’t add seats quickly. Some have used that to defend their margins. Others, with neither pricing power nor protection against fuel cost rises, had little to fall back on when costs doubled.

Unless another source is named, figures come from the webinar presentations. Where a value was read from a chart it is given as approximate, and calculations marked as ours are our own.

Scarcity sets the stage

Pricing power starts with supply, and supply is tight.

The conflict with Iran began on 28 February, when Iranian strikes on Gulf states led them to close their airspace, as Al Jazeera has reported. Before then, Cirium expected global capacity, measured in available seat kilometres (ASKs), to grow by 5–6% in 2026. Its ceasefire scenario now points to growth of about 1.4%, and Cirium’s tracked data shows flying running slightly below that path, with ASKs up 1.1% in September.

Airlines could not have grown much faster even without the war:

• Cirium does not expect Airbus and Boeing deliveries to exceed the 2018 peak of roughly 1,580 aircraft until 2027. Based on Cirium’s figures, including its 2026 forecast, Airbus and Boeing will have delivered about 3,500 fewer aircraft between 2019 and 2026 than a flat 2018 rate would have produced.
• Cirium data suggests operating lessors have already placed every single-aisle aircraft due to them in 2026 and 94% of those due in 2027. For widebodies, Cirium estimates just 14 open lessor slots through 2031.
• Around a quarter of the Pratt & Whitney-powered A320neo-family fleet is still parked, against about 4% of LEAP-powered aircraft, according to our reading of Cirium’s data.

When competitors cannot add seats, the classic response to a fare increase, a rival flooding the route with cheaper capacity, is largely off the table.

The fuel bill became the fare

The trigger was fuel. Bloomberg Intelligence’s US Gulf Coast series put jet fuel at $4.57 per gallon at the time of the webinar. Argus recorded an average US price of $4.90 on 22 October, the highest single-day average in its records, KPBS reported. Argus puts the price 96% above its pre-war level, according to Open Jaw.

The gap between jet fuel and crude explains much of it. Bloomberg Intelligence put the jet–Brent spread at about 196 cents per gallon, against roughly 40–60 cents through 2024 and 2025. Refining, not only the oil price, is driving the bill. That is why Delta’s refinery has become a competitive asset: Delta’s chief financial officer said the airline expects to pay $4.25 per gallon in the fourth quarter, including a refinery benefit of about 40 cents, as Forbes reported.

US airlines passed the cost on. Bloomberg Intelligence’s analysis of company filings shows third-quarter yields up by about 14% at Delta, around 17–18% at United and American, and about 23% at Southwest. Frontier’s second-quarter yield was up roughly 26%. These are the largest increases since 2022.

Over the same period, Bloomberg Intelligence data shows unit costs excluding fuel rose only 2–7%, in line with the past three years. Strip out fuel, and US airline economics have improved markedly.

The industry’s public framing is worth noting. Chris Sununu, head of Airlines for America, has said carriers are absorbing most of the fuel increase themselves and passing only part of it on, putting holiday fare increases at 20–30%, according to KPBS. That message prepares customers for higher prices while positioning airlines as sharing the pain.

Two shields: pricing power and cost protection

Bloomberg Intelligence’s margin table, based on company filings, shows that the second quarter, the first full quarter of the conflict, hurt every region. Average adjusted EBITDA margins compared with the same quarter a year earlier:

Region	2Q26	2Q25
Latin America	13.7%	24.9%
Europe	14.8%	21.6%
Asia-Pacific	11.5%	18.8%
North America	7.6%	13.2%

Within the averages, the airlines that held up best had at least one of two shields.

The first is pricing power. Airlines with premium cabins, strong hubs and loyalty programmes can raise fares without losing their best customers. In Bloomberg Intelligence’s table, IAG’s margin slipped only from 26.2% to 23.6%, while Delta and United lost around two points in the third quarter. A customer who books for a cabin, a schedule or a loyalty tier accepts a higher fare more readily than one who books on price alone.

The second is cost protection. Ryanair is the clearest case. It competes almost entirely on price, yet Bloomberg Intelligence’s table shows its margin among the highest in Europe, at 22.6% against 29.0% a year earlier. In May, Ryanair said it had hedged 80% of its fuel for the year to March 2027 at about $67 a barrel, LSE.co.uk reported. Delta’s refinery plays a similar role. A low-fare model works in a fuel shock when the cost base is locked in.

Airlines with neither shield lost the most. In the same table, Wizz Air’s margin more than halved, from 21.0% to 9.8%, and JetBlue’s second-quarter margin was 1.6%.

The distinction matters for 2027, because cost protection expires. Ryanair is largely unhedged for the following year, the Financial Times reported, and Michael O’Leary has predicted the biggest rise in airfares in history, of up to 20% over the next 12 months, according to Bloomberg. For the price leader in European short-haul, the commercial message is shifting from cheap fares to booking before fares rise.

There are limits. United’s chief executive, Scott Kirby, expects travellers to become more price-sensitive as fares rise, Open Jaw reported, and airline chiefs are increasingly questioning how long consumers will keep absorbing higher fares, according to Forbes.

Spirit’s exit removed the price floor

Spirit Airlines wound down in the spring, with the bankruptcy court approving the rejection of its remaining aircraft leases, Octus reported. Its disappearance is the clearest example of how pricing power was created this year.

Bloomberg Intelligence’s analysis of Cirium schedule data shows US domestic seats up 0.4% in the third quarter despite Spirit’s exit:

• Frontier added 25% more seats, JetBlue 17% and Breeze 45%.
• American and United have scheduled 8–9% more domestic ASMs for the fourth quarter.

Capacity was replaced, but by airlines charging more. The market’s price floor has moved up.

Frontier shows how a low-cost brand repositions. According to the same data, its domestic flights rose 22.6% in the third quarter, while flights touching Latin America fell 13.5%. It agreed to return 24 A320neos to AerCap early, AirlineGeeks reported, and plans to hand back 13 more by year-end, replacing them with larger A321neos as part of a push toward premium seating, according to FlightGlobal.

Frontier also markets itself as “America’s Greenest Airline”, citing a fuel-efficiency advantage of more than 40% over other major US carriers in its second-quarter results filed with the US Securities and Exchange Commission. With fuel at record prices, that claim does double duty: an environmental message to customers and a cost message to investors.

Southwest was the only US airline in Bloomberg Intelligence’s table whose margin rose to 10.1% in the third quarter from 6.3%, with yields up about 23%. It had the strongest pricing response of the large carriers.

Network moves are brand moves

Capacity shifts this year have also changed which airline brands travellers see on many routes.

Latin America. According to Bloomberg Intelligence’s analysis of Cirium schedule data, US airlines cut narrowbody seats touching the region by 18% in the third quarter, while the Latin American airlines in its sample added 4.5%. LATAM grew ASMs by 20% and has scheduled a 27% rise for the fourth quarter; Copa and Volaris also grew by double digits. In our reading, US carriers are moving aircraft back to a domestic market where fares are rising. For Latin American airlines, the US retreat is a chance to build recognition with US travellers on routes where they were previously the second choice.

The Atlantic. The same analysis shows capacity between the US and Europe flat in the third quarter. In the fourth quarter, US carriers are scheduling about 2.8% more ASMs, while European airlines hold steady at 0.3%. Joint ventures share much of the revenue, but the brand on the aircraft and the loyalty programme credited tilt further toward US carriers this winter.

Europe–Asia. Cirium’s data shows scheduled seats for October up about 5% year on year and more than 20% above 2019. That is consistent with travellers who once connected through the Gulf switching to direct flights. Gulf carriers will need to win those customers back once their hubs recover.

The fleet as a commercial tool

This year’s fleet decisions have been as commercial as operational.

According to Cirium, total passenger flight hours rose by 1% year on year in September, but hours per aircraft fell on older types: −6.3% for the A320ceo, −4.7% for the 737-800 and −4.6% for the A321ceo. Airlines are putting their newest, most fuel-efficient aircraft on the most valuable flights and keeping older ones as a buffer. Cirium’s identified retirements are on course for the lowest annual total since 2021, based on our extrapolation.

On long haul, widebody production is running at roughly half its 2019 level, by our calculation from Cirium’s first-flight data. With only around 20 widebodies idle at lessors, Cirium says premium long-haul capacity is hard to add, which supports premium fares.

The warning in the lease market

The aircraft market holds one signal that pricing teams should watch closely.

Cirium’s market data show widebody lease rates for new-production types up about 10–13% over the year. Lease rates for the A320ceo family fell about 8–11%, and for the A320neo by about 5%. Lessors hold 325 idle single-aisle aircraft, almost 2.5 times the level a year ago, many of them Airbus jets returned by Spirit and Frontier. Values have held, “for now”, in Cirium’s words.

The same failure that lifted US fares has made Airbus narrowbody capacity cheaper to lease. That is an opening for anyone looking to grow on price: a European leisure carrier, a Latin American low-cost airline, or a new US entrant. If operators find those aircraft and are willing to undercut today’s fares, the price floor that Spirit’s exit raised could start to fall again.

What commercial teams should watch in 2027

• Whether fares follow fuel down. American Airlines has already answered. “If fuel comes down, I think airfares probably stay largely where they’re at right now,” chief financial officer Devon May told the Financial Times, as Fox Business and AirlineGeeks reported. If other airlines take the same line, margins will recover quickly, but so will the risk of customer backlash and regulators asking questions.
• Expiring fuel hedges in Europe. When low-cost carriers lose their cost protection, the region’s price leaders will be raising fares too, and “book early” may become the standard sales message.
• Where the former Spirit and Frontier aircraft go. Cheap A320-family leases are the most likely route back to low-fare competition.
• The return of GTF-powered A320neos. More fuel-efficient capacity adds supply, which tends to soften prices.
• Loyalty and premium demand. The airlines that held their margins this year relied on customers who chose them for more than price, and they are investing in the product to keep it that way. British Airways has announced a retrofit of its A380 cabins, with new First suites and Club Suites across the upper deck, and a new Heathrow Terminal 5 lounge due to open in late 2028, according to Future Travel Experience. Connectivity is part of the same race: American Airlines will fit Starlink across its entire mainline fleet of more than 1,030 aircraft, with installations starting in early 2027, the airline announced. Watch whether premium demand holds as fares stay high, and whether product investment becomes the main way airlines justify them.
• Gulf carriers’ recovery. Winning back connecting travellers who have switched to direct flights will be as much a marketing task as a network one.