Skyrocketing jet fuel prices ground Mexican airlines and reshape air travel

Rising jet fuel prices are forcing airlines to adjust operations or shut down entirely. The surge—driven by global conflicts and market pressures—has hit budget carriers hardest. Some Mexican airlines have already halted flights, while others raise fares to cope with soaring costs.

Jet fuel prices in Mexico jumped by 101% between January and March 2023. The spike followed broader market instability, worsened by the Middle East conflict. Fuel now accounts for 35% to 40% of an airline’s operating expenses, squeezing profit margins.

Magnicharters became the first casualty, suspending all flights. Industry analysts pointed to unsustainable fuel costs as the main reason. Spirit Airlines also paused operations after a liquidity crisis tied to oil price surges. Low-cost carriers like Volaris and Viva Aerobus face the biggest challenges. Their business models rely on cheap fares, leaving little room to absorb higher fuel expenses. For every 10-cent increase in fuel price per gallon, an airline’s EBITDA falls by one percentage point. Volaris responded by raising ticket prices and boosting frequencies on international routes. Aeroméxico, meanwhile, is targeting travellers willing to pay more when fares climb. The shift highlights the growing divide between budget and premium airlines in a volatile market.

The fuel price crisis is reshaping Mexico’s aviation sector. Some airlines are raising fares, while others have stopped flying altogether. With fuel costs consuming a larger share of expenses, budget carriers will continue to struggle unless prices stabilise.