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…
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:
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.