When the war began, jet fuel doubled, and airlines raised fares. Fair enough. Jet fuel has since fallen 40% from its April peak — and the fares never came back down.
The excuse expired
By Deutsche Bank’s count, carriers have raised fares eight times since the war began. The average domestic round trip booked through travel agencies hit $628 in May — up nearly $100 from a year earlier, per the Airlines Reporting Corp.
Alaska Air’s CFO was refreshingly direct about the math: today’s tickets cover the spot price of fuel entirely. The surcharge outlived the thing it was supposedly charging you for.
And fuel is ordinary again — WTI crude closed Monday at $68.55. The fares are not ordinary. That gap has a name: consolidation pricing, where prices track how few rivals remain, not what anything costs.
Fewer rivals, higher fares
What changed was not the fuel. It was the competition. Spirit — the discount carrier — shut down in May, and the industry’s tone flipped almost overnight.
Delta and United sit at record stock highs. American is up 30% in a month and is boosting third-quarter domestic schedules 4.6%. Southwest’s CEO said the quiet part out loud, calling himself “very bullish” with Spirit out of business. When the discounter dies, everyone else’s pricing “environment” improves. Environment is a polite word for your wallet.
The same logic is now writing checks in Europe. Castlelake — a private-equity firm with $38 billion under management — agreed in principle to buy easyJet at £6.90 a share, roughly £5.5 billion, about $7.3 billion.
That price is 24% above Friday’s close and a striking 75% above where the stock sat before the interest surfaced. easyJet jumped 9.3% on the news. Ryanair is up 72% over the same stretch. Private equity does not pay 75% premiums for companies it expects to compete on price.
Some perspective on what just ended. From 2019 to 2025, airfares fell 3.5% while overall prices rose 26%. That six-year bargain was brought to you by competition. The competition just left the building.
One honest caveat, from Melius Research: the real test comes after Labor Day, when summer demand fades and we learn whether the new fares hold. Maybe discipline cracks. But fewer carriers, fuller planes, and private equity buying the survivors argue the era of airfare deflation is over.
Pricing power, owned
For travelers, the playbook is short. Book early, because waiting rarely gets rewarded in a consolidated market. Treat the $628 average as a floor in your travel budget, not a ceiling. And stop waiting for the war surcharge refund — it is not coming.
For investors, this is a live lesson in pricing power — the ability to keep a price increase after its excuse expires. Annoying as a customer. Valuable as an owner.
That trait, in durable form, is exactly what the Capital Wealth Growth Portfolio’s dividend screens hunt. We just prefer politer industries: companies that raised prices without a war and raised dividends through the cycle.
Airlines are not that. Their pricing power historically lasts until the next fare war or the next fuel spike — and with oil at $68.55, they are currently enjoying both tailwinds at once. Decades of dividend growth is the durable version; one great post-bankruptcy summer is not.
Mark the post–Labor Day fare data on the calendar. It will tell us whether this is a new structure or just a hot season.