Delta Air Lines plans to "meaningfully reduce" its capacity growth due to soaring fuel costs, CEO Ed Bastian announced on Wednesday. The airline expects oil prices to remain elevated for an extended period, prompting a 3.5 percentage point reduction in planned capacity growth. Jet fuel prices have surged to $4.81 per gallon, up from around $2.50 before the U.S.-Israeli strikes on Iran in February. Delta anticipates a $2 billion increase in fuel costs for the second quarter and aims to recover 40-50% of these costs through higher fares. Lower-revenue flights, such as overnight and midweek services, will be most affected by the capacity cuts.
Delta’s premium customers remain resilient despite geopolitical uncertainty, Bastian noted. The airline reported a 9.4% revenue increase in the first quarter, driven by premium, corporate, and loyalty spending. Premium revenue grew 14% year-over-year, reflecting strong demand from affluent travelers. Meanwhile, lower-income consumers face financial strain, highlighting a K-shaped economic recovery.
Other U.S. carriers have also adjusted capacity in response to rising fuel costs. Since March 13, domestic capacity growth plans have been cut by over half a percentage point. Delta raised checked baggage fees earlier this week, following similar moves by JetBlue and United.