United Airlines cargo customers will be hit with a “market disruption fee” starting May 1 designed to help offset the rising cost of jet fuel and a variety of other operating expenses triggered or exacerbated by the Iran war. The move preceded earnings results showing a surprising decline in United’s cargo revenue during the first quarter.
United Cargo last week notified carriers of the pending surcharge, saying it covers the increased cost of doing business globally. The fare will vary by region and customers are advised to contact their United sales representative for applicable fares for specific commercial routes.
The price of jet fuel, typically an airline’s second-largest expense after labor, has nearly doubled since the United States and Israel attacked Israel on February 28. Many carriers have raised their fuel surcharges in recent weeks, but United’s rate covers a range of costs. It’s similar to the approach taken by the United States Postal Service, which will impose an 8% surcharge starting Sunday on package products to cover a range of rising transportation costs.
“United Cargo is experiencing increasing costs imposed on us by suppliers, partners and broader market conditions. The rate reflects a combination of external pressures across the air cargo ecosystem, including impacts imposed by our suppliers, partners and broader market conditions. It is not tied to a single factor, but rather a combination of multiple elements,” United Cargo spokesperson Stephanie Robbe Kramer said in a message to FreightWaves.
The airline has not indicated a specific duration for the disruption fee, only saying that it will “evaluate conditions closely and communicate any adjustments to this fee as conditions evolve.”
United Airlines’ cargo revenue was $422 million for the first quarter, a year-over-year decline of 1.6%, the company reported Tuesday afternoon. The drop in sales was a surprise considering the global air cargo market grew about 6.5% in the first two months of the year, compared with 2024, and spot market shipping rates have risen between 25% and 40% since March 1 as demand grows amid reduced industrial capacity due to war-related flight restrictions in the Middle East. Delta Airlines posted a 9% increase in first-quarter cargo revenue to $226 million, while rival American Airlines said Thursday that cargo revenue rose 12.9% to $219 million.
Robbe Kramer declined to provide an explanation for the contraction in freight revenue.
Overall, United Airlines posted pretax earnings of $900 million or adjusted earnings per share of $1.19, beating analyst estimates, with operating income up 10.6%. It plans to cut 5% of its capacity the rest of the year to help contain costs during a volatile period.