While global forecasts point to a relative easing of aviation fuel costs, airlines in Latin America and the Caribbean continue to operate under far tighter constraints. Behind the expected moderation in crude oil and jet fuel prices worldwide, regional realities — cost structures, exposure to the U.S. dollar, taxation frameworks and limited access to Sustainable Aviation Fuel (SAF) — continue to exert sustained pressure on margins.
Fuel remains a core cost driver
Fuel remains one of the most significant cost components for airlines in the region. According to Bloomberg Línea, jet fuel typically accounts for 30% to 40% of operating costs for Latin American carriers, placing them among the most exposed globally to energy market volatility.
This exposure is further amplified by currency effects. As Bloomberg Línea highlights, a large share of airline expenses — including fuel, aircraft maintenance, spare parts and leasing — is denominated in U.S. dollars, while revenues are largely generated in local currencies. Exchange-rate fluctuations therefore magnify the impact of fuel price movements on operating results.
A global slowdown that benefits the region unevenly
At the global level, IATA expects a modest decline in fuel costs in 2026, with average jet fuel prices projected at USD 88 per barrel, down from USD 90 in 2025. Fuel is expected to represent 25.7% of total operating expenses for airlines worldwide.
However, these global averages mask sharp regional disparities. In Latin America, fuel procurement remains structurally more expensive due to fragmented supply chains, heavy reliance on imports in several markets, and heterogeneous national tax regimes. Bloomberg Línea notes that geopolitical tensions and oil market volatility continue to translate more directly into higher costs for Latin American airlines than for their North American or European counterparts.
SAF: a climate lever, but a short-term cost burden
The transition toward Sustainable Aviation Fuel adds another layer of complexity. According to the MIT report Sustainable Decarbonization of Aviation in Latin America, jet fuel prices in the region stood at approximately USD 0.70 per liter in 2024. By contrast, projected SAF production costs vary widely across countries:
- USD 1.11 to 1.77 per liter in Brazil,
- up to USD 2.86 per liter in Peru,
- with intermediate ranges in Colombia, Mexico, Chile and Ecuador.
These cost differentials explain why SAF, despite its decarbonization potential, currently represents a net cost increase for airlines in the region. IATA estimates that the marginal global cost of SAF will reach USD 4.5 billion in 2026, while SAF availability is expected to cover only 0.8% of total aviation fuel consumption. In Latin America, where incentive mechanisms remain limited, SAF uptake is driven primarily by voluntary commitments rather than binding regulatory mandates.
Strategic trade-offs under sustained pressure
Taken together, these factors force Latin American airlines to make increasingly tight trade-offs between cost control, fleet renewal and network strategy. The MIT report underscores that sustained increases in fuel prices, if not mitigated through policy or market mechanisms, could weigh on regional air travel demand over the medium term. Its projections suggest that higher fuel costs may slow traffic growth, particularly in domestic and regional markets that are highly price-sensitive.
Operational efficiency gains — fleet modernization, improved flight and ground operations, and more sophisticated fuel hedging strategies — therefore remain critical levers. Yet IATA also points out that fleet aging, driven by delivery delays and persistent aerospace supply-chain disruptions, continues to limit the pace of fuel-efficiency improvements in the short term.
Cost pressure likely to persist
Despite more favorable signals at the global level, fuel cost dynamics in Latin America remain structurally more constrained than in other regions. The absence of a harmonized regional SAF framework, high exposure to the U.S. dollar, and country-specific fiscal policies continue to weigh on airline competitiveness.
In the near to medium term, the key challenge is therefore not a broad-based decline in fuel costs, but rather the ability of airlines to absorb these structural constraints without undermining connectivity or already-thin profitability. In a market where margins remain tight, fuel continues to be a central strategic variable for Latin American aviation.
