airlines unlikely – Even as oil prices fall after a US-Iran preliminary agreement to end the nearly four-month war that shut the Strait of Hormuz, airlines are unlikely to move quickly on ticket prices or checked-bag fees. With demand steady, supply tight, and capacity decisions
Flyers looking for cheaper seats this summer may find their searches lead back to the same answer: not yet.
Oil prices—airlines’ second-largest expense after labor—have tumbled to below $80 a barrel from highs above $100 after the US and Iran announced a preliminary agreement aimed at ending nearly four months of war. That conflict closed the Strait of Hormuz, a vital artery for global oil shipments.
But aviation analysts say the end of hostilities won’t automatically translate into lower fares, and even a real peace shift may not show up in consumers’ booking screens for some time. Airlines also appear wary of a key detail in the broader picture: Israel is not a direct party to the agreement.
Since the US and Israel launched the conflict in late February, carriers have been adjusting their pricing in ways meant to withstand higher fuel costs. They cut unprofitable routes while raising fares and ancillary fees, a strategy meant to stabilize profits when jet fuel was under pressure.
Richard Aboulafia, aviation analyst and managing director of AeroDynamic Advisory, said airlines have little reason to reverse course quickly. Tight seat supply combined with resilient demand, he argued, keeps incentives misaligned—especially when profits are holding up.
“Things are pretty good, maybe traffic is down a little, but profits aren’t, right?” Aboulafia said. “So why would you? Inflation is a great excuse to get more pricing power.”
KAYAK flight search data shows the imbalance in actual prices. Average domestic airfares are up about 8% since the war started, while average international airfares are up about 18%. Fares from the US to Amsterdam and London have increased by more than $200 roundtrip, according to the same data.
Checked-bag fees tell a similar story. US airlines have raised checked bag fees by as much as $50 one-way to offset soaring oil prices, with most major carriers now charging between $40 and $50 per bag each way.
At the Bernstein Strategic Decisions Conference in May, airline CEOs at Delta, United, and Southwest did not dispute warnings that fares may remain elevated. They pointed to resilient demand, tight capacity, and durable pricing power.
“We and our competitors are all focused on ratable production of results, steady production of results, sustainable margins, and so I do think that produces a backdrop where we’ll certainly not attempt to give some of these fare increases back,” Southwest CEO Bob Jordan said.
Analysts also warn that lower oil does not automatically force ticket prices down. For airline ticket prices to fall. supply needs to increase or demand needs to soften. Raymond James analyst Savanthi Sath said. She added that both moves look unlikely. especially since oil is still up 50% year-over-year and oil shocks may continue even with a deal.
Sath also pointed to the timing of capacity commitments: capacity through August is likely mostly finalized by now, with the earliest opportunity to add back capacity arriving in the fourth quarter that begins in October.
A sense of uncertainty also lingers beyond economics. The Trump administration has repeatedly announced possible deals to end the war, but many ultimately fell through. The latest agreement is moving to a Friday signing. but may leave key issues unresolved—among them the whereabouts of Iran’s highly enriched uranium.
President Donald Trump warned that if Iran were to acquire a nuclear weapon, “all hell will rain down on them.” Officials have spoken about the deal in broad statements, but its specific terms remain secret.
United CEO Scott Kirby also suggested caution about how quickly the business reality could change. At an industry conference in early June, he said he is not confident any deal to reopen the Strait of Hormuz would last.
Sath added that airlines may hesitate to add capacity after a series of shocks over the past two years, including persistent inflation that has driven up operating costs and two government shutdowns that caused mass flight delays and cancellations.
There is another factor pressing on price expectations: Spirit Airlines’ collapse in May. NerdWallet travel analyst Sally French said fewer seats and one fewer ultra-low-cost carrier mean downward pressure on fares that budget-conscious travelers want is unlikely.
“With fewer seats and one fewer ultra-low-cost carrier, we’re generally not seeing the kind of downward pressure on fares that budget-conscious travelers want,” French said.
On checked-bag fees, analysts across the board were also blunt: they are unlikely to drop quickly. Data from the Bureau of Transportation Statistics shows US airlines made roughly $5.5 billion in revenue from checked bag fees in 2025.
Sath said changes to bag fees tend to be stickier regardless of the demand environment, adding that it should be a while before bag fees increase further if oil prices are lower.
In the weeks ahead, the promise of a signed deal may bring a new headline—but for travelers, the immediate story is likely to be slower. Seats, capacity planning timelines, and the economics of ancillary fees may keep prices elevated even as the war recedes and oil steadies.
Iran peace deal airline fares checked bag fees Strait of Hormuz oil prices aviation analysts US airlines capacity through August US-Iran preliminary agreement Savanthi Sath Richard Aboulafia Bob Jordan Scott Kirby Spirit Airlines