Airline passengers could soon benefit from cheaper tickets as the cost of jet fuel continues to fall, according to Willie Walsh, head of the International Air Transport Association (Iata).
Speaking ahead of the global airline summit in Delhi, the former British Airways boss said that the recent slump in oil prices was already bringing down the price of kerosene – the single largest expense for most airlines – and would likely have a knock-on effect on ticket prices.
“There’s almost a direct correlation between the price of oil and the price of airline tickets,” Walsh told Bloomberg. “When fuel prices fall, it helps offset any weakening demand, and that tends to feed through to fares.”
Walsh, who is due to unveil Iata’s updated global outlook for airline profitability and revenues on Monday, said that lower fares “clearly drive down the overall revenue for the industry”, but typically stimulate passenger demand.
The comments come amid growing economic uncertainty as global markets react to President Trump’s tariffs and an increasingly fragile geopolitical outlook. Airline executives meeting in Delhi have voiced concerns about demand softening in some regions, with booking patterns becoming more volatile.
However, oil prices – a key cost pressure on the industry – have been easing. Brent crude futures are now hovering around $64 a barrel, having briefly dipped below $60 in April to a four-year low.
That drop was triggered by a surprise decision from Opec+ in the spring to raise output. On Saturday, the oil producers’ alliance announced another large increase in production for July. A coalition of eight countries, including Saudi Arabia and Russia, agreed to bring an additional 411,000 barrels a day back online.
The latest move continues a trend that could see as much as 1.4 million barrels a day of new supply added between April and the end of July, reversing two years of output cuts.
Opec+ had been limiting supply since 2022 in an effort to support prices, but internal tensions – particularly among Gulf states – have led to a rethink. Saudi energy minister Prince Abdulaziz bin Salman is said to have driven the push for higher output, arguing that the burden of cuts was no longer being shared equitably.
However, analysts point out that the Saudi economy remains heavily reliant on higher oil prices to fund domestic spending. The International Monetary Fund estimates that the kingdom needs crude prices to stay above $90 a barrel to meet the fiscal demands of Crown Prince Mohammed bin Salman’s Vision 2030 plans.
For airlines, the current dip in fuel costs offers a rare reprieve at a time when inflationary pressures, aircraft delivery delays, and labour shortages have driven up costs across the board.
Walsh said that while lower fuel prices might strain industry-wide revenues in the short term, they could prove helpful in sustaining demand through a potentially choppy period.
“Cheaper fuel gives us a bit of breathing space,” he said. “But it’s still a very dynamic environment. Airlines are going to have to be nimble and smart in how they manage pricing and capacity.”
For passengers, the upshot could be lower fares – at least for the summer.