Aviation Fuel Pricing, Benchmarks, and Cost Volatility Trends

Introduction

Aviation fuel pricing has become less predictable and more scrutinized at the same time. Airlines are facing price fluctuations that move faster than schedule adjustments or fare updates. As a result, pricing discussions have moved from procurement teams into executive-level meetings.

Fuel suppliers are also changing the way they communicate value. Suppliers are now highlighting the importance of transparency in index choice, uplift charges, and location-based premiums. Airlines have become cautious about ambiguous pricing structures, particularly in airports with limited capacity, where it is difficult to change suppliers. As a result, pricing clarity is increasingly used as a commercial differentiator.

Benchmark dependence remains central. Most contracts still refer established regional indices, but airlines are paying closer attention to how those benchmarks track local conditions. Discrepancies between index movement and delivered cost have triggered renegotiations. Some carriers are promoting hybrid pricing models that blend indices with fixed components, seeking balance rather than precision. In January 2026, Honeywell announced that SAF One Energy Management Limited will use Honeywell UOP Ecofining™ process technology to produce sustainable aviation fuel (SAF).

Pricing discussions are also influenced by traffic recovery patterns. The recovery of international routes has been uneven, which impacts fuel uplift volumes and negotiating power. Suppliers who serve hubs with high long-haul traffic have stronger negotiating power, while those who serve secondary markets are under pressure to cut prices. These factors make it difficult to implement centralized procurement. 

Access the full Aviation Fuel Market Report for expanded analysis on evolving pricing models, supplier strategies, and future demand scenarios.

Major Trends, Drivers and Challenges

Volatility is the key factor that determines pricing structures. Airlines continue to be cautious about fixed pricing. Many are seeking contracts with shorter terms or flexible provisions that permit periodic changes. Suppliers, on the other hand, understand that fixed pricing can be a deterrent to commitment.

The choice of benchmarks is being scrutinized more closely. Airlines are now questioning whether the conventional benchmarks adequately capture the dynamics of the aviation industry, especially in the event of supply chain disruptions.

Supplier pricing practices are also changing. Refiners and distributors are increasingly segmenting their customers, providing tiered pricing based on volume predictability, complexity, and credibility. Airlines with predictable volumes and strong balance sheets are prioritized, while small-scale airlines are offered less favorable pricing.

Although fuel surcharges exist, competitive pressures make them less effective. Airlines pay more of their fuel costs than they publicly disclose, which heightens interest in efficient purchasing. Internal benchmarking at stations has become prevalent, with fuel organizations monitoring variances closely and escalating them more quickly than in the past.

Government regulation also acts as a key challenge hindering the overall market growth. Governments in some areas are reviewing airport fuel pricing practices, especially in non-competitive markets. Although these inquiries are intended to support airlines, they can delay commercial negotiations. Suppliers tread carefully, seeking to balance regulatory requirements with commercial flexibility.

Airlines with extensive hedging programs can find benchmark-linked fuel contracts misaligned with their financial positions. This has prompted some carriers to scale back hedge coverage or better align hedge instruments with physical fuel pricing references.

Looking forward, pricing discussions are expected to remain intense over the forecast period. Alternative fuels may eventually alter pricing dynamics, but near-term volumes are too small to shift benchmarks impactfully. For now, airlines and suppliers are focused on managing exposure rather than eliminating it.

Table of Contents

1. Introduction
2. Definition and Scope
3. Aviation Fuel Pricing Structures
4. Benchmark and Index Frameworks
5. Supplier Pricing Strategies
6. Airline Cost Management Approaches
7. Regional Pricing Variability
8. Regulatory Considerations
9. Hedging and Financial Alignment
10. Challenges and Constraints
11. Outlook and Strategic Direction

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