American, United, Southwest Cut Flights as Fuel Costs Spike

‍DALLAS — On September 16, at the Morgan Stanley conference, American Airlines (AA) informed its investors that it will be scaling back flight operations on thinner-margin routes, as fuel costs continue to surge due to the conflict in the Middle East.

First reported by Reuters, United Airlines (UA) and Southwest (WN) made similar announcements. UA said it would cancel some flights already scheduled for December, with further cuts possible into early 2027 if fuel prices stay high.

On its part, WN said it has already cut its planned 2026 capacity growth roughly in half, from an original target of 2-3% growth.

It's Not a Demand Problem 

Demand isn't the problem. All three carriers have seen strong demand despite high prices, which has so far let them stay ahead of rising costs. But the most recent hike in fuel prices has forced them to slash capacity on routes with thinner margins. This lets them keep operating their more profitable routes without pulling back entirely.

"We are not flying to maximize market share. We're flying to maximize profitability and free cash generation," United Airlines CFO Michael Leskinen said at the Morgan Stanley conference.

One can see just how much these fuel hikes have added to the carriers' costs. AA said a roughly 1-cent increase per gallon adds up to US$10 million in added costs, which has so far accumulated to a roughly US$1 billion increase in fourth-quarter costs. 

Airlines Begin Scaling Back Capacity

While the carriers have not publicly released a complete list of routes being suspended specifically because of higher fuel prices, some capacity reductions have already been announced. United (UA), for example, has removed some flights scheduled for December, while American (AA) is scaling back its planned capacity growth during the holiday period. Southwest (WN), meanwhile, has roughly halved its planned 2026 capacity growth from its original target of 2-3%.

How Long Will Fuel Prices Stay High?

The biggest uncertainty for airlines is how long fuel prices will persist at elevated levels. Prices cooled down slightly after the Iran-US ceasefire deal and the reopening of the Strait of Hormuz. However, as the ceasefire deal fell through and hostilities resumed, fuel prices once again climbed, with recent events, including strikes on Saudi oil infrastructure, making the situation far worse and pushing oil prices well beyond US$100 per barrel.