We finally have our first set of reliable fare data from the spring that was 2026. Things got expensive.

If you’ll remember all the way back to February, there was a thing that happened in the Middle East - yadda yadda - jet fuel prices more than doubled from $2.30 a gallon to $4.88 a gallon. Airlines warned fares would go up as a result.

So what happened?

Fares went up.

Because why wouldn’t they? It’s more expensive to fly, so you should pay more, right?

There is some truth to this, though not how you may think. While this still does not explain the massive jumps in domestic fares, you have to consider that passengers paid more because they were told they would have to pay more. The messaging exists for a reason.

But, there is far, far more nuance to this story.

As it stands today, fuel prices are up 22% compared with February. Considering fuel typically makes up about 20% of an airline’s operating costs (yeah, it’s that low now), that means overall costs have risen about 5% as a result of the high fuel costs.

So fares rose 5%, right? Uh, no. Domestic U.S. fares rose 20% as of May.

In the words of Will Hunting, “How do you like them apples?”

Airlines discovered pricing power they never knew they had - at least the power they never had with low-cost competitors.

You think a 20% increase in fares is extreme? Hold my beer…

Airline fees rose 29%.

That includes airport fees, bag fees, and wait for it… fuel surcharges.

So, for the domestic U.S. passenger, the fare you paid increased 20%, but then everything else rose almost 30%.

Yeah, things aren’t exactly terrible for the airlines.

So what happened? You said fares were more likely to decrease unless there was a reduction in capacity!

There was a reduction in capacity.

And not just any capacity - the lowest fares in the market. That’s right, we’re not done talking about Spirit. The exit of the yellow low-cost airline just betrayed the secret of pricing power in the U.S. - competition matters.

So did the rise in fuel costs increase fares? In a way, yes, it did, actually. Aside from whatever you thought you should pay more out of the goodness of your own heart to help the poor, struggling (yet profitable) airlines, it was the sharp rise in fuel prices that likely convinced the Spirit creditors to finally pull the plug. Then it was that capacity (and more importantly, the fares) that left the market. The cause/effect relationship still passes through capacity, but fuel did have something to do with it. Probably.

But why do we give Spirit so much credit for keeping fares low?

Aside from the point that we already proved Spirit kept other airlines’ fares low (see: Spirit is gone. Fares are going up.), we can see in the international market, far less exposed to Spirit, things moved as expected.

Fares are up internationally but 8.4%, not the almost 21% of domestic. Meanwhile, capacity is down. This is exactly the type of relationship we would expect. If you consider a typical growth rate of about 4% in capacity, being down 4% gives you an 8-point swing (it’s not actually a 1:1 relationship, but the net drop in capacity from typical growth equals the 8% of fare increase in handy in illustrating the point)

Here is the cleaner story, relatively untainted by Spirit’s exit. The U.S. international market is reacting exactly as we would expect. If you reduce seats, fares will go up. Then, consider the World Cup is in North America - how else would Scotland’s Tartan Army travel to delight us Americans?

International demand is up (as expected), and capacity is down. Fares went up.

And yet, on the domestic side, capacity is flat even without Spirit, and fares are up 21%. As it turns out, the “without Spirit” really matters.

Ha, ha, ha…

no.

(translation for Latin American readers: Ja, ja, ja… no)

The airlines have discovered the holy grail of pricing power. It’s not underhanded - it’s just how the market works. Take out the lowest competing prices and watch how your prices go up.

Spirit was the trigger for fares, not fuel. Fuel was just the trigger for Spirit.

I would love to be wrong, simply because our travel expenses would be much lower at Visual Approach if fares dropped with fuel. I’m not holding my breath.

In the end, despite all the warnings about high jet fuel prices, the situation today is pretty clear:

It’s good to be an airline.

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