# Airlines Hold Fare Increases in Place Even as Jet Fuel Costs Ease

Israel's agriculture ministry reversed a poultry import approval six months after granting it, and average wages there rose 7 percent without households noticing the difference.

- Published: 2026-08-18T05:17:18.667Z
- Canonical: https://polylog.news/2026-08-18/airlines-hold-fare-increases-in-place-even-as-jet-fuel-costs
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [Financial Times](https://www.ft.com/content/9d8f4215-4d19-43df-ab81-b9f8adb057c8?syn-25a6b1a6=1), [Globes (Hebrew)](https://www.globes.co.il/news/article.aspx?did=1001552551#utm_source=RSS), [Globes (Hebrew)](https://www.globes.co.il/news/article.aspx?did=1001552545#utm_source=RSS)

Airlines are refusing to move first on fares. The Financial Times reported that carriers are in [a standoff over price cuts](https://www.ft.com/content/9d8f4215-4d19-43df-ab81-b9f8adb057c8?syn-25a6b1a6=1) as jet fuel costs ease, because each of them wants to keep the fare increases introduced after the Iran conflict began. No carrier gains by cutting alone, so the increases stay until competition forces them down or demand falls away.

Israel supplies a second example of the same mechanism operating through policy. Globes reported that the agriculture ministry [reversed its approval](https://www.globes.co.il/news/article.aspx?did=1001552551#utm_source=RSS) for the company Baladi to import poultry products from Brazil, six months after granting it. The company had expected the licence to lift its revenue by 10 to 15 percent a year. Chicken prices in Israel have risen about 30 percent over five years, and with the cheaper import channel closed, consumers continue paying the domestic price.

Household income has not kept up with any of this. Average wages in Israel rose 7 percent, but Globes found that the gain is [barely visible in household budgets](https://www.globes.co.il/news/article.aspx?did=1001552545#utm_source=RSS), that demand for junior technology workers has contracted, and that roughly a quarter of a million workers have left the labour force altogether. An average that rises because low-paid workers exit the sample is not the same as workers becoming better off.

The common thread is that prices set during a supply shock do not return to their previous level when the shock recedes. They require either new entrants or an actual fall in demand, and in both of these cases one of those routes has been closed by coordination and the other by regulation.

## What this means

Consumers pay for a shock twice, once when input costs rise and again when those costs fall but prices stay where they were. Airlines and protected domestic producers capture the difference as margin, which supports their earnings and keeps measured inflation higher than input costs alone would imply. Central banks reading such prints see persistence and hold rates, which is how a supply shock two years old still shapes the cost of money. The route out is entry by new competitors, and a licence reversal of the kind Israel just made removes exactly that.

## What to watch

- Whether a large carrier breaks ranks with a fare cut on competitive routes, the first evidence that pricing discipline is failing.
- Israeli food price data in the coming months, which will show whether the import reversal keeps poultry prices elevated.
- Labour force participation rather than average wages, because a rising average combined with a shrinking workforce describes a weaker economy than the headline suggests.