As jet fuel expenses, which spiked during the Iran conflict, begin to ease, airlines are deadlocked over whether to reduce ticket prices. Rick Lewis of Boston Consulting Group noted, "This year's operating environment is complex, and every carrier is striving to maximize profitability. Everyone is hoping competitors won't be the first to blink and cut fares, aiming to avoid a fierce price war during the late-summer booking peak. It's a classic standoff."

Ticket prices remain elevated, propped up by fuel surcharges introduced after the conflict's outbreak. If one airline lowers prices, others are forced to follow suit to stay competitive. Carriers, battered by high fuel costs, are closely monitoring rivals' every move. Ben Smith, CEO of Air France-KLM, told media, "We operate in a low-margin industry," pointing to the group's single-digit operating margin. "If there's any chance to hold current pricing, we'll do our utmost to defend it." Smith emphasized the group's desire to maintain existing fare levels, reiterating, "We are a low-margin industry."

Data from price agency Argus Media shows the Northwest European jet fuel benchmark hit $1,900 per tonne after the Iran conflict erupted in February, and while it has been highly volatile, it now trades around $1,300 per tonne. Brent crude, which surged to $114 per barrel in March, is currently trading just below $90. European carriers are partly shielded by fuel hedging strategies, whereas their US counterparts do not hedge fuel purchases. However, as fuel represents the largest cost item for airlines, all carriers have been hit hard by the price surge; fare increases and other cost-cutting measures have only partially offset the impact.

Alaska Airlines, which launched its first route to London Heathrow this year, estimates passengers are now paying "perhaps 10% to 20% more than last year," according to executive Ben Minicucci. He stated, "We are highly focused and constantly monitoring whether we're approaching the consumer's tipping point." Minicucci added that, partly, airfares aren't actually high relative to inflation. "If some current fare levels can be maintained while jet fuel retreats to existing levels... that price stickiness would be a significant boon for the industry."

Even budget carriers are seeing similar trends. Malaysia's AirAsia, which does not hedge fuel, has raised fares by about a third, but CEO Tony Fernandes noted "demand has only slipped around 10%, which is very encouraging." According to the International Air Transport Association, despite resilient travel demand and falling fuel prices, industry profits are expected to halve due to the crisis, prompting some airlines to cut capacity this year.

Luis Gallego, head of International Airlines Group (IAG), parent of British Airways, remarked, "Fares aren't solely tied to fuel prices; they depend on capacity and market demand. This year, we're reducing capacity." IAG, which also owns Iberia, Vueling, and Aer Lingus, is evaluating its capacity deployment for the final months of the year. He added, "Other carriers are doing the same, so the ultimate fare level will hinge on overall capacity supply in the market."

Some airlines are competing directly with Gulf carriers, known for aggressive pricing strategies, which are leveraging their direct-route advantage to keep fares as high as possible. Qantas CEO Vanessa Hudson noted that European travelers, for example, are still willing to pay a premium for direct flights to Australia—even those requiring fuel stops—rather than opting for cheaper itineraries with connections in the Gulf.

Some low-cost carriers believe cutting prices can help capture customers. Malaysia's AirAsia plans to lower fares to just 5% above pre-war levels. Fernandes stated, "We want fares to return to pre-war levels." He acknowledged that, to offset some losses from the fuel price surge, AirAsia must maintain higher fares for a while, but "we will eventually drift back down to those lower, pre-war fare levels."

Ultimately, most airline pricing decisions will be swayed by competitors, including legacy carriers that have raised fares and Gulf rivals like Emirates and Qatar Airways, which are cutting prices to win back customers. Air France-KLM's Smith described Gulf carriers' pricing as "extremely aggressive." He added that their primary goal is attracting tourists to the region rather than pursuing profitability, leading to behavior that "doesn't always follow rational business logic," complicating the industry's path to breakeven in a turbulent year. "We must also contend with this kind of competition."