Supplier Solutions: May 2026 Updates
In this month’s Supplier Solutions update, we’re seeing airlines rapidly respond to rising fuel costs with fare increases, higher bag fees, and capacity reductions, while demand remains strong. Carriers are also leaning into innovation and strategic shifts, from Delta’s long-standing refinery investment to Southwest’s transformation, driving strong early results. At the same time, customer experience continues to improve through digital upgrades and operational efficiencies, even as the industry navigates regulatory changes, such as FAA-mandated flight reductions at Chicago O’Hare.
Airlines Response to Rising Fuel Costs
With a rapid increase in jet fuel prices since the start of the Iran conflict, airlines have quickly responded. All major U.S. carriers increased the bag fee for the first checked bag by $10 and have also raised fares by 10% to 20% in most markets. The major carriers have also announced capacity cuts for 2026, averaging 5%. What remains to be seen is what pricing changes occur if/when fuel prices start to come back down. Given that demand has remained high, price increases are likely to be extended. All the major U.S. airlines have stopped fuel hedges, so these actions have been implemented almost immediately.
Source: npr.org
Delta Air Lines’ Unique Plan to Offset Rising Fuel Prices
Back in 2012, Delta took an incredibly unique approach and purchased an oil refinery in Pennsylvania. The cost of the purchase and facility conversion was over $250M. This facility produces jet fuel, gasoline, and diesel. While Delta still pays market prices for fuel, this facility has generated over $1B in annual refinery profits. The facility provides 75% of all Delta fuel needs in the Northeast U.S. Delta has and will continue to raise prices when fuel costs rise, and this facility provides them with another much-needed revenue stream.
Source: Delta News Hub
Southwest Airlines Business Transformation Early Results Are Positive
Southwest made major changes in early 2026, including assigning seats, adding extra-legroom seats, charging for bags, and changing its fare structure. Quarter 1 of 2026 financial results have been very strong and include:
- Operating revenues of $7.2B, up 12.8% y/y
- Net income of $277M
- Operating margin of 4.6%, an improvement of 8.1 points
- Drove strong customer buy-up, with approximately 60% of customers upgrading from the base product in 1Q26, vs 20% in 2025
- Continued fleet upgrades with in-seat power and larger overhead bins, with approximately two-thirds of all aircraft to have both features by late 2026
Source: Southwest Newsroom
American Airlines Gives Customers More Control with Digital Upgrades
The upgrades start with a redesigned trip details page, the central hub for everything related to an upcoming flight. Customers can tap or swipe through new navigation mini banners to move between flight details, easily spot important callouts, and access essential actions at a glance. Waitlist, Check-in, and Boarding pass are all now front and center. It will also be easier to request an upgrade, add or change a seat assignment, request wheelchair services, add an infant, and explore in-flight entertainment.
Source: American Airline Newsroom
Delta Air Lines Making International Connections Smoother with Technology
Seamless baggage transfer is now available for all customers departing from Seoul, South Korea (ICN) to Minneapolis (MSP) or Detroit (DTW) and onward to a Delta Air Lines connection. Passengers can go straight to their connecting gate after clearing U.S. Customs and Border Protection and security, without needing to reclaim or recheck their bags. This will save up to 30 minutes during the connection process. Later this year, Seamless Baggage Transfer will be expanded to include flights from Seoul to Seattle and Los Angeles.
Source: Delta News Hub
American Airlines and Southwest Airlines both Partner with America250
American Airlines and Southwest Airlines join a distinguished group of America250 partners, including Walmart, Coca-Cola, and Kraft Heinz, and collectively underscore the essential role of the private sector in making the 250th anniversary the most ambitious and inclusive commemoration in U.S. history. Both carriers produced an aircraft with special livery for the occasion. This event also coincides with American’s 100th anniversary.
Source: Southwest Newsroom
FAA Mandates Flight Reductions at Chicago O’Hare (ORD) for Summer Season
The FAA has directed airlines to cut back flights at ORD by about 12% for the busy summer travel season. The changes will apply to flights scheduled between May 17th and October 24th. United alone will be cutting one hundred daily flights at ORD. American Airlines expects similar reductions, which will impact all airlines at ORD.
Source: Chicago Sun Times
