Air Canada has announced the suspension of several key routes, including major U.S. connections, after jet fuel prices nearly doubled in the wake of the Iran-United States war that kicked off in late February.
According to Air Canada, all service from Toronto and Montreal to John F. Kennedy International Airport will be suspended starting June 1, 2026, and resume on October 25, 2026, while flights to Salt Lake City and Jacksonville will also be suspended. Air Canada will, however, maintain service to the New York area through LaGuardia and Newark, with approximately 34 daily departures still operating from across Canada.
Jet fuel prices jumped from around $2.50 per gallon pre-war to over $4.30 per gallon by mid-April, exposing carriers with minimal oil price hedging to surging operating expenses.
Air Canada joins a growing list of global carriers, including Lufthansa and KLM, that have recently trimmed their schedules to combat skyrocketing operating costs, while carriers like JetBlue (NASDAQ:JBLU), Spirit, and Frontier were already struggling with profitability before the surge. Jet fuel typically accounts for 20% to 30% of an airline’s total operating expenses, making it one of the highest and most volatile costs, often rivaling labor costs.
Last month, we reported that Delta Air Lines (NYSE:DAL), United Airlines (NYSE:UAL), and Southwest Airlines (NYSE:LUV) are the only three U.S. carriers expected to remain profitable if jet fuel prices persist around $4.00 per gallon. Delta and United maintain higher operating margins and a revenue mix weighted toward premium travel, which is less sensitive to price hikes than budget segments while Southwest Airlines has historically used aggressive hedging to lock in lower fuel costs, though it scaled back some positions in 2025. Delta also benefits from owning the Monroe Energy refinery, which provides a “leg-up” by partially protecting the company against the rising spread between crude oil and refined jet fuel.
While airlines have been raising fares and baggage fees by $10-$50 to offset costs, budget carriers have less room to absorb these hikes without losing their price-sensitive customer base.
By Alex Kimani for Oilprice.com
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