Alaska Airlines, based in Seattle, is canceling some flights due to high aviation fuel prices, driven by the war in Iran. The airline reported a loss of $193 million in the first three months of 2026. To address these rising costs, the company has already increased baggage fees and is now reducing its capacity in May and June. A spokesperson for the airline explained that the cuts mainly affect nighttime flights to high-frequency destinations. Additionally, Alaska suspended its financial forecast for the rest of the year, warning that fuel prices are expected to continue rising. Aviation fuel averaged less than $3 per gallon in the first quarter, but the airline expects it to reach $4.75 per gallon this month. Airlines such as Delta, Southwest, and United have already raised baggage fees and reduced capacity to offset the increase in fuel costs. A potential fuel shortage in Europe and Asia could worsen the impact of the war in Iran on global tourism in the coming weeks if a fragile agreement to reopen the Strait of Hormuz collapses, making it more likely that ticket prices will rise and more flights will be canceled as summer approaches. Crude oil prices fell on Friday after Iran’s Foreign Minister stated that oil tankers and other commercial ships could once again pass through the strait without obstruction, which serves as a route for approximately a fifth of the world’s oil and natural gas. President Donald Trump celebrated the news but later stated that the United States would continue blocking Iranian ships entering or leaving the strait until Washington and Tehran reached an agreement to end the war, which began on February 28 when the United States and Israel attacked Iran. The oil market could take months to recover from shipping disruptions, and fuel prices tend to take longer to fall than crude oil prices. In signal of the ongoing impact of the war on airlines and their passengers, Air Canada announced on Friday that it will cancel services to John F. Kennedy Airport in New York between June and October due to rising aviation fuel costs. Aviation fuel, a refined product based on kerosene, is the largest cost for airlines, accounting for approximately 30% of their total expenses, according to the International Air Transport Association. And fuel prices have risen about double since the war began. Shortages could begin as early as next week. In an exclusive interview with The Associated Press on Thursday, Fatih Birol, Director of the International Energy Agency, said Europe had ‘perhaps six weeks’ of remaining aviation fuel supply. In general, some European countries maintain several months of aviation fuel in inventory at any time, according to a report by the IEA published this week. Top airline executives have reacted cautiously, acknowledging potential fuel issues but working to reassure customers. Nonetheless, some airlines have already passed these costs to consumers by increasing baggage fees and other additional services, integrating the costs into ticket prices or raising fuel surcharges. The world is losing between 10 and 15 million barrels of oil per day due to the blockage of the Strait of Hormuz, said Pavel Molchanov, senior investment strategist at Raymond James & Associates. Although the IEA has released 400 million barrels of oil from emergency reserves of its members, that will not help in the short term, added Molchanov. ‘It could take until the end of the year for all those barrels to reach the market,’ he said. Delta Air Lines announced on Tuesday that it is increasing baggage fees for checked bags, part of a broader wave of U.S. airlines responding to higher aviation fuel prices linked to the war in the Middle East. Starting Wednesday, most passengers on domestic and short-haul international routes will pay $10 more for their first and second checked bag, and $50 more for the third. This raises the fees to $45 for the first bag, $55 for the second, and $200 for the third, according to Delta. ‘These updates are part of Delta’s ongoing price analysis for its business and reflect the impact of global conditions and sector dynamics,’ said the airline in a statement. The change marks the first increase in checked baggage fees on domestic routes for Delta in two years. Fees for long-haul international flights are not affected.
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