The global aviation industry is once again flying into a localized storm with global repercussions. The escalating conflict in the Middle East over the past couple of months, along with the effective closure of the Strait of Hormuz, has disrupted energy supply chains, pushing jet fuel prices to levels that threaten the post-pandemic recovery.

The global average jet fuel price skyrocketed from $95 per barrel at the end of February 2026 to $163 for the week ending May 8, as per data published by the International Air Transport Association (“IATA”). Since fuel accounts for up to a quarter of airline operating expenses, carriers have recently been slashing profits, hiking fares, and cutting capacity to survive.

For investors, this volatility puts a massive spotlight on airline exchange-traded funds (ETFs). While these funds offer diversified exposure to the industry, the rapidly surging cost of fuel over the past couple of months has left many questioning whether exposure to these ETFs is a strategic boon or a looming portfolio disaster as summer travel is set to peak soon.

To answer that, we must look beneath the surface of the current energy price spike and evaluate how the industry’s structural response affects the value of airline-heavy funds before making any investment decision involving these ETFs.

The Energy Crisis & Airlines

The current crisis is a direct byproduct of the escalating war in the Middle East, a region vital for global oil production and refining capacity. This geopolitical instability has sent Brent crude skyrocketing, but the "crack spread" — the difference between the price of crude oil and the refined jet fuel produced from it — has widened further due to limited refining availability.

The aviation industry, which was enjoying a robust revival after the pandemic, is once again in distress. Following the catastrophic losses of the COVID-19 pandemic, the industry had finally returned to profitability in 2024 and 2025, driven by "revenge travel" and high demand. However, the latest spike in fuel prices may now be wiping out those gains for jet carriers.

The impact is already visible, with American Airlines (AAL Quick QuoteAAL - Free Report) cutting its profit outlook to a potential loss as fuel expenses rise $4 billion. At the same time, Air France-KLM anticipates a $2.4 billion increase in fuel costs and lowers its capacity growth expectations. Air Canada, Air New Zealand, and JetBlue Airways have withdrawn their full-year guidance.

United Airlines (UAL Quick QuoteUAL - Free Report) has warned that it may need to raise ticket prices by 15-20% to offset soaring fuel costs. The impact has been even harsher for some carriers, such as Spirit Airlines, which was abruptly shut down due to financial strain caused by the fuel spike.

As cited in The Guardian, IATA’s Willie Walsh warned that “inevitable” jet fuel shortages will push airfares higher this summer, with the impact potentially extending into 2027. The crisis is largely tied to Europe’s dependence on the Middle East for nearly three-quarters of its jet fuel imports, supplies that are now being disrupted by the conflict.

The airline industry’s progress is halted at the moment, forcing mass capacity cuts, surcharges, and emergency borrowing that have essentially put profitability on life support.

Investor Strategy: Stay Put or Flee?

For investors holding or considering airline ETFs, the decision ultimately depends on their time horizon. In the short term, the headwinds are undeniable. For those seeking quick gains, the strong correlation between jet fuel prices and airline operating costs makes these ETFs particularly high-risk investments right now.

However, for long-term investors, the narrative changes. While it's true that fuel shocks expose structural weaknesses, particularly for low-cost carriers reliant on price-sensitive passengers, not all airlines are equal. International Airlines Group, owner of British Airways, for example, entered the crisis with 60-70% of its fuel hedged, a premium-heavy business model, and the ability to redeploy aircraft from Gulf routes. In contrast, airlines with weak balance sheets and no hedging might see margins crushed.

Investors who already hold airline ETFs may choose to keep them in their portfolios to capture potential upside once the crisis subsides and stronger carriers emerge with larger market shares.

3 Airline ETFs to Monitor

If you are looking to navigate the ongoing volatility in the airline industry, keep the following funds on your radar. Whether you are looking for a tactical entry, as buying during a crisis has historically been a profitable entry point for those who can tolerate a bumpy ride, or monitoring your current stake, these represent the most liquid paths to industry exposure:

U.S. Global Jets ETF (JETS Quick QuoteJETS - Free Report)  

This fund, with net assets of $746.1 million, offers exposure to companies across the airline and manufacturing sectors worldwide. Delta Airlines (DAL Quick QuoteDAL - Free Report) holds the first spot in this fund, with 12.14% weightage.  

The fund charges 60 basis points (bps) as fees. 

MAX Airlines 3X Leveraged ETNs (JETU Quick QuoteJETU - Free Report)   

This fund, with a market cap worth $4.3 million, provides exposure to U.S.-listed companies that have operations relating to the airline industry, including airlines and aircraft and aircraft parts manufacturers, as well as businesses involved in air freight and logistics, aircraft leasing, and airline and airport operations. 

Boeing holds the first spot in this fund, with 10.10% weightage.  The fund charges 95 bps as fees. 

MAX Airlines -3X Inverse Leveraged ETNs (JETD Quick QuoteJETD - Free Report)

This fund, with a market cap worth $5.9 million, provides exposure to companies that have operations relating to the airline industry, including airlines and aircraft and aircraft parts manufacturers, as well as businesses involved in air freight and logistics, aircraft leasing, and airline and airport operations. 

Boeing holds the first spot in this fund, with 10.10% weightage.  The fund charges 95 bps as fees.