How to combat the rising cost of airfare

Consumers looking to jump on a plane in the next twelve months are facing the perfect storm — high prices and high demand. 

The rising cost of airfare has made headlines over the cost of the last few months. The U.S. Bureau of Labor Statistics’ Consumer Price Index recently released data that shows airfare is up 33% in 2022 when compared to this time last year.

Regardless of the number, the jump in prices has been noticeable.

You may be asking yourself, surely airfare prices will come down, right? 

The cold reality is…

Not likely.

High prices and full planes means the current state of air travel will likely continue.

According to IATA, from 2020-2022 (during COVID), the airlines lost a combined 206 billion dollars. In an industry that survives off razor thin margins, there is a lot of revenue to make up for. 

While airlines have been forced to raise prices due to external factors (rising fuel and labor costs), there hasn’t been a major drop in demand. In fact, airlines have been forced to cut their schedules during the summer because they are short staffed. 

So while airlines are short staffed and incurring higher costs, they are also operating with a looming recession. All of these headwinds and demand has not dropped. 

Airfare is more expensive than ever before, and airlines keep selling out planes. It turns out consumer demand has not been affected by higher prices, even in the face of a looming recession. 

In fact, passenger volume is near and often beating 2019 volumes. 

For those you are planning future travel, the forecast says things will likely stay the same, or get worse before they get better. 

With that said, there are some things you can do to protect yourself against rising costs:

• Book early. All of the old tips and tricks to score the best price on a plane ticket have been thrown out the window. As long as jet fuel remains expensive, book your plane ticket early, prices are likely to go up before they go down. 
• Use group contracts. If you are flying as part of a group of 10 or more people, you can book as a group. This locks in the same price for everyone, and allows you to defer your payments to 30 days prior to travel. 
• If you are a corporate buyer planning a meeting or team offsite, make sure you move up your registration process. In the past, meeting planners have launched registration 5-7 weeks before travel. This now needs to be done around the 9 week mark. 
• On the corporate side, be sure to work with travel agencies to help secure the optimal contracts and ensure everyone is booked in a timely manner. Having an organized booking workflow will save money. 
• Big destinations with lots of traffic will often be cheaper (outside of peak travel times). Popular spots like New York City will continue to be a better value than second and third tier destinations. 

If you are a corporate buyer and need help budgeting airfare costs for your next meeting, use the free tool, Forecast. 

Should you have any questions about the state of air travel, we are happy to be a resource. Our general advice is plan early, lock in reasonable prices, and don't wait thinking prices will come down, it will likely get worse from here.

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