S&P Global Ratings says resilient passenger demand in Asia-Pacific gives carriers room to keep fares high, supporting margins through volatile fuel costs.
Alpha Score of 51 reflects moderate overall profile with moderate momentum, moderate value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
Asia-Pacific airlines, including carriers in India, may keep ticket prices elevated even as jet fuel costs ease, S&P Global Ratings said in a sector report. Resilient passenger demand, the ratings agency said, gives airlines room to recover higher operating costs.
“Even as jet fuel prices ease, we believe airlines may not be inclined to reduce fares quickly since demand has proven to be more inelastic,” S&P said in the report.
Passenger yields, a measure of revenue per passenger, rose about 10–15% year-on-year as of June 2026, the agency estimated. Airlines had raised fares to offset the sharp increase in fuel costs. Higher prices, however, have had limited impact on travel demand so far. Total passenger traffic in Asia-Pacific contracted just 1–2% year-on-year in May and June, according to S&P, with part of that decline also tied to capacity reductions. Load factors, which measure how much available seating is filled, have remained relatively stable.
“As such, we believe airlines may keep prices higher to make up for elevated fuel costs,” S&P said, adding that the pricing power supports airlines’ financial buffers.
The pricing pressure follows jet fuel prices surging above $240 per barrel by the end of March 2026 after disruptions linked to the Middle East conflict. Fuel prices have eased over the past two months, but S&P said the geopolitical situation remains volatile and costs could stay elevated through the rest of the year.
The ratings agency expects airline margins to recover more meaningfully from the fourth quarter, helped by seasonal peak demand. It assumes Brent crude will decline to $80 a barrel in 2027 from $110 in 2026. For more on crude oil price drivers, see the crude oil profile.
Low-cost carriers face greater pressure from fuel costs because fuel accounts for nearly 40% of their operating expenses, compared with about 33% for full-service airlines, S&P said. Among airlines that reported June-quarter results, the average year-on-year EBITDA margin decline was roughly 15% for a low-cost carrier versus about 9% for a full-service carrier, the agency estimated.
Despite near-term cost pressures, S&P expects passenger demand in Asia-Pacific to remain resilient, supported by growing middle classes and economic growth in China and India.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.