Delta CEO Ed Bastian warned Friday that travelers could see higher airfare costs continue even as oil prices fall from multi-year highs – which he expects will help boost the carrier’s profits to hit its annual goal.
“I think it’s sustainable,” Bastian told CNBC when he was asked about high ticket prices, nodding to robust travel demand, more seating options and an industry that has been burnt in the past – and is hesitant to expand capacity as soon as oil starts to drop.
Domestic and international airfare have dipped in recent weeks from highs in April and May – but consumers are still coughing up much more for a ticket than they did last year as the Iran war has pushed jet fuel to a premium, multiplying operating costs for major airlines.
Last week, the average domestic airfare hit $366, 38% higher than the same time last year, while the average international ticket cost $919 – finally falling below the $1,000 level but still 24% higher than 2025 prices, according to the latest Kayak data.
Expectations that airfare will stay elevated helped the Atlanta, Ga.-based airline reaffirm its full-year earnings per share forecast of $6.50 to $7.50.
In the third quarter, the airline expects earnings per share of $2 to $2.50, compared to analysts’ expectations of $2.02.
Delta also shared its second-quarter results, with adjusted earnings per share of $1.56, beating expectations of $1.48, and revenue of $17.67 billion, topping a forecast of $17.53 billion.
Bastian said Delta – the most profitable US airline – has benefited from catering to higher-income customers in a K-shaped economy, which has seen wealthier Americans continue to spend big while lower-income individuals cut back.
The carrier’s premium seat sales raked in $6.92 billion in revenue in the second-quarter, while the main cabin brought in $6.85 billion – and it’s hoping to capitalize on demand for premium offerings with more seating options.
Delta this week launched “basic fares” for first class and business seats, which is an economy seat that includes a few perks that are typically reserved for Delta members.
A higher-than-expected boost in demand from the World Cup and a jump in corporate travel also helped drive the airline’s strong profits, Bastian said.
Jet fuel typically accounts for the bulk of airline operating costs – and global carriers have seen prices soar as the war in Iran effectively blockaded the Strait of Hormuz, creating the worst-ever energy supply disruption.
Airlines have responded by slashing routes, especially long-haul flights that require more fuel; hiking airfare; and raising fees for checked bags, seat selection and other add-ons.
But industry execs still say they haven’t passed the full cost of higher fuel costs along to consumers.
Bastian said Delta has passed about 60% of the added costs along to consumers – but that number should hit 100% this quarter.
In the second quarter, Delta saw its revenue per available seat mile – which measures how an airline is bringing in for each seat a passenger takes up – climb 17% from the previous year. But its costs per available seat mile rose 21%.
Net income plummeted 25% from the previous year to $1.66 billion, or $2.44 a share, while operating revenue jumped 19% to $19.76 billion.
The airline has other revenue streams aside from airfare, including cargo, a fuel refinery and a maintenance and repair provider.