With summer airfares already on the rise, airline executives have been quick to warn travelers that prices will only rise as spring and summer approaches.
— RNC Research (@RNCResearch) April 11, 2022
Delta CEO Ed Bastian told the Financial Times last week that higher fuel costs would “without a doubt” result in fare increases, and that the airline would impose a fuel surcharge on international flights as “market conditions permit.”
Meanwhile, Delta president Glen Hauenstein said at a JPMorgan investor conference that passing on higher fuel costs is “something that we can easily achieve and that we will achieve in the second quarter.” We need to recapture somewhere between $15 and $20 each way on a ticket because fuel prices fluctuate so much here.” This summer, expect a $30-$40 increase on a roundtrip ticket.
Airfare experts are saying not to believe the line that higher airfares are solely due to higher jet fuel prices..
To begin with, a large portion of the price increases can be attributed to seasonal fluctuations and increased demand. “It’s normal for airfares to rise 7% to 8% from January to March,” says Adit Damodaran, an economist at Hopper, an airfare comparison website.
Damodaran is correct in pointing out that TSA throughput — the number of passengers screened by TSA officers at airport checkpoints — has risen to 85 percent to 90 percent of 2019 levels, a first since the outbreak began.
Then there’s the matter of the pilot shortage. “The airlines were concerned about their entire future at the start of the pandemic.” As a result, they effectively stopped hiring, training, and preparing for a future in which they would require more pilots,” says Scott Keyes, co-founder of Scott’s Cheap Flights, an email subscription service for flight deals.
Number of flights scheduled to be *higher* in August 2022 than August 2019.
First instance of higher scheduled airline capacity since the pandemic began. pic.twitter.com/guRsCd42Ir
— Scott Keyes (@smkeyes) June 2, 2022
Of course, blaming rising fuel prices for rising airfares is better public relations.
While high demand, rising jet fuel prices, and a pilot shortage are all conspiring to raise airfares this summer, there are some factors that could counteract that trend.
According to data from the International Air Transport Association (IATA), which represents 290 airlines around the world, jet fuel prices have dropped by more than 6% globally and nearly 7% in North America in the last week. According to economic theory, if this trend continues, airfares should decrease.
Also keep in mind that the airline landscape has changed significantly since the last oil crisis in 2008, when airfares skyrocketed. “Only 4% of people in the United States flew on budget airlines back then.” It’s currently over 15% and rising. Budget airlines are four times larger than they were during the last oil crisis, and their ability to anchor industry wide prices is far more prevalent today than it was previously,” says Keyes. “As much as major airlines would like to snap their fingers and say, ‘We’re going to raise all fares 10%, 20%,’ they have difficulty doing so because leisure travelers’ top priority is cheap flights.”
It’s a travel premise that if you want a cheap flight, you should book as soon as possible.
Another tip: Instead of looking for trends, look for bargains. “The ‘average airfare’ is often misleading because people believe they will no longer be able to find cheap flights,” says Keyes. “The question that travelers should be asking is whether or not cheap flights are still available. And the answer is unequivocally, categorically yes. We come across these bargains on a daily basis. The cost of a round-trip flight to Hawaii is $215. To Milan, it costs $395. Summer rates to the Greek islands start at $585. To Australia, it costs $579. Are there still bargains to be had? Absolutely.”