IATA: Jet fuel prices to fall in 2026, but airlines' environmental costs to continue to rise

The International Air Transport Association (IATA) forecasts that the cost of aviation fuel will fall to $252 billion in 2026, a 0.3% decrease from 2025, IATA Senior Vice President of Sustainability and Chief Economist Marie Owens Thomsen said at IATA Global Media Day, Report informs.

According to her, the 2026 forecast points to a more balanced pricing environment: lower fuel costs are partially offset by rising non-fuel costs, but the overall slowdown in inflation is helping to stabilize operating costs.

"The consensus forecast is for Brent crude oil prices to fall to $62 per barrel (-11% by 2025). Jet fuel prices are expected to reach $88 per barrel in 2026 (-2.4% compared to 2025). As high-cost hedging contracts expire, airlines will be able to purchase fuel at lower prices, close to market prices. Fuel costs will decline to 25.7% of total operating costs, down from 26.8% in 2025," she said.

Thomsen noted that, given the growth in traffic volumes, fuel consumption in 2026 will reach 106 billion gallons (+2.7% compared to 2025).

Thomsen also noted the expected increase in environmental costs.

"The cost of complying with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will increase to $1.7 billion in 2026 (up from $1.3 billion in 2025). Additional airline costs for sustainable aviation fuel (SAF) will increase to $4.5 billion. Additional airline costs for sustainable aviation fuel (SAF) are expected to reach $4.5 billion in 2026. The available supply of SAF will be 2.4 million tonnes, or 0.8% of global fuel consumption. Airline non-fuel costs will reach $729 billion (up 5.8% by 2025)," the senior vice president said.

A weaker US dollar is also expected to positively impact the profitability and margins of non-US dollar-denominated airlines by reducing dollar-denominated costs such as fuel, leases, and aircraft maintenance.

According to IATA estimates, 55-60% of global airline expenses are accounted for by dollar-denominated liabilities, while the dollar's share of revenue is 50-55%.

"Therefore, a 1% weakening of the dollar could lead to a 1% increase in global industry profits and an increase in operating margins of approximately 0.05 percentage points," she noted.