Alaska Airlines cuts flights, raises bag fees as Iran war drives jet fuel prices higher

Alaska Airlines is canceling some flights as the war in Iran sends jet fuel prices skyrocketing.

The Seattle-based carrier announced it has lost $193 million in the first three months of 2026.

To cope with the rising costs, Alaska has already raised baggage fees — and now it’s cutting capacity in May and June. A spokesperson for Alaska Airlines says the cuts mostly affect late-night departures in high-frequency markets.

The airline is also suspending its financial guidance for the rest of the year, warning that fuel costs are expected to keep climbing.

Jet fuel averaged under $3 per gallon in the first quarter, but Alaska expects it to reach $4.75 per gallon this month. Delta, Southwest, and United previously raised baggage fees and cut capacity to offset the surge in fuel costs.

Jet fuel supplies are lagging. What does that mean for airlines and travelers?

A looming jet fuel shortage in Europe and Asia could compound the Iran war’s impact on world travel within weeks if a fragile agreement to reopen the Strait of Hormuz collapses, making higher airfares and flight cancellations even more likely as the summer travel season approaches.

Crude oil prices plunged Friday after Iran’s foreign minister said tankers and other commercial vessels could again pass unimpeded through the narrow waterway off the country’s coast that serves as a conduit for about one-fifth of the world’s oil and natural gas.

President Donald Trump cheered the announcement but then said the U.S. would continue its blockade of Iranian ships entering or leaving the strait until Washington and Tehran reached a deal to end the war, which started Feb. 28 when the U.S. and Israel attacked Iran.

The oil market is expected to take months to recover from shipment disruptions, and fuel prices typically take longer to fall than prices for crude. In a sign of the conflict’s ongoing repercussions for airlines and their passengers, Air Canada said Friday it was canceling service to New York’s John F. Kennedy International Airport between June and October due to surging jet fuel costs.

Jet fuel — a refined kerosene-based oil product — is airlines’ biggest cost, making up about 30% of overall expenses, according to the International Air Transport Association. And jet fuel prices have roughly doubled since the war began. Shortages could start next.

In an exclusive Thursday interview with The Associated Press, International Energy Agency Director Fatih Birol said Europe had “maybe six weeks” of remaining jet fuel supplies. In general, some European countries hold several months’ worth of jet fuel inventory at a time, according to an IEA report released this week.

Airline officials have largely reacted with caution, acknowledging potential fuel issues but working to reassure customers. Still, some carriers have already passed costs on to consumers by increasing fees for baggage and other add-ons, embedding costs into ticket prices, or raising fuel surcharges.

How much is the world supply of jet fuel lagging?

The world is losing 10 million to 15 million barrels of oil a day due to the closure of the Strait of Hormuz, said Pavel Molchanov, senior investment strategist at investment firm Raymond James & Associates.

Even though the IEA has released 400 million barrels of oil from members’ emergency reserves, that won’t help in the short term, Molchanov added.

“It could take until the end of the year to get all of those barrels onto the market,” he said.

Delta joins the growing list of US airlines raising checked bag fees as jet fuel costs soar

Delta Air Lines announced Tuesday it is raising checked baggage fees, part of a broader wave of U.S. carriers responding to higher jet fuel prices tied to the war in the Middle East.

Beginning Wednesday, most passengers on domestic and short-haul international routes will pay $10 more for their first and second checked bags, and $50 more to check a third. That brings 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 review of pricing across its business and reflect the impact of evolving global conditions and industry dynamics,” the carrier said in a statement.

The change marks Delta’s first increase in checked baggage fees on domestic routes in two years. Fees for long-haul international flights are not affected.

Contributing: The Associated Press