Home Economy US airfares fall, much to the relief of passengers

US airfares fall, much to the relief of passengers

by SuperiorInvest

Recently in the United States, airfares to many popular destinations have fallen to their lowest levels in months; Even travel during the holiday season is much cheaper than last year. This has given consumers a break after months of frustration over high prices for all types of goods and services.

The abundance of good offers suggests that perhaps the vigorous recovery of the airline industry after the pandemic is finally slowing down, as the supply of tickets matches the demand, which seems relatively firm, and even exceeds it on some routes. . .

Consider the rates that Denise Diorio, a retired teacher from Tampa, Florida, recently secured. She spent less than $40 on a round-trip ticket to Chicago and only paid $230 for a round trip from New York to Paris, which she plans to take this month.

“I’ve been telling all my friends that if they want to go somewhere, they should buy their tickets now,” he said.

The bargains I found may be exceptional, but Diorio is right when he says there are plenty of deals.

Just this month, the average price for a domestic flight around Thanksgiving was nearly 9 percent below last year’s level. As for flights around Christmas, they were about 18 percent cheaper, according to the booking and price-tracking app Hopper. Kayak, the travel search engine, looked at a broader range of dates around the holidays and found that domestic flight prices were about 18 percent lower around Thanksgiving and 23 percent lower. .percent for Christmas.

“In many cases, we’re seeing some of the lowest fares since travel resumed following the 2020 cuts, actually,” said Kyle Potter, executive editor of travel blog and deal alert service Thrifty Traveler.

Ticket prices for flights within the United States dropped over the summer, Potter said, and in recent times it’s more common to find deals on international travel, particularly to Europe.

Airlines lower their fares when they want to entice more people to book tickets because demand is low or competition is stronger. Competition has certainly intensified on some routes, but travel experts say there is no certainty that demand will decline.

This year’s Thanksgiving is expected to set a record for air travel, with predictions of nearly 30 million passengers, according to Airlines for America, an industry group. This figure would be 9 percent higher than last year and 6 percent above 2019, before the pandemic.

But some airlines say demand is declining during periods other than holidays or peak seasons. Additionally, some airports have handled such a large number of flights that transportation companies have been forced to reduce fares to fill planes.

That hadn’t been an issue for most of the post-pandemic recovery period. Weather and other disruptions limited flight supply last year and in 2021, as did shortages of trained pilots, spare parts and aircraft, among other factors. Those conditions caused ticket prices to rise, kept planes full and helped airlines make excellent profits.

“The aviation industry has never seen the kind of profit margins and return on equity seen over the past 2½ years,” said John Grant, principal analyst at aviation data and consulting firm OAG. “We are almost back to a more normal industry.”

For the major US airlines, the good times continue, driven in particular by a high demand for international flights. But smaller, lower-cost companies have begun to suffer. Several revealed disappointing financial results for the quarter ended in September. Executives at those airlines have said demand is declining, fares have fallen and costs have remained high. They also point out that bad weather and a shortage of air traffic controllers have complicated air operations.

For example, JetBlue Airways lost $153 million in the third quarter, compared to profits of $57 million in the same period last year. The company recently indicated it plans to shift some flights from crowded markets, such as New York, to others where it expects better performance, such as the Caribbean. Budget carriers Spirit Airlines and Frontier Airlines recently disclosed to investors looking to cut tens of millions of dollars in costs.

Competition has been fierce in some major markets, driving down rates and profits.

In Denver, where Frontier’s headquarters are located, there were 14 percent more seats available this summer than in the summer of 2019, according to aviation data provider Cirium. Miami and Orlando, Florida, two popular destinations where many companies fly, saw even larger increases in capacity.

However, while airlines added flights in popular markets seeking to attract passengers, airports in other cities, such as Los Angeles, a hub for many major airlines, saw significant reductions in capacity compared to summer 2019. . .

“There’s clearly a huge trade-off between airlines that are doing well and those that are struggling, in terms of their margins, when we compare where their concentrations are,” Frontier CEO Barry Biffle said last month during a conference call to present the results of the dryer corresponding to the third quarter.

As for international routes, analysts are not sure why rates are going down or if they will stay that way. Bargains like the ones Diorio scored for his trip to Paris could be a sign that larger airlines will soon face financial pressures or simply that the industry is returning to a pre-pandemic normal.

“Demand for travel to Europe typically drops during the winter,” said Steve Hafner, CEO of Kayak. “So it seems to me that that reflects normal trends.”

But demand for international travel could face headwinds, in part because of the wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to put money into travel now than they were in the past two years, when they had the money they had saved during the pandemic. Even if demand remains strong, airlines risk offering too many seats on popular overseas routes.

Whatever the cause of the recent drop in fares, the deals are a welcome relief for travelers after suffering years of high prices, Potter said.

“In any case, the recipe for cheap flights is there,” he said. “If it’s just a little overcapacity, it’s a win for consumers. “If travel demand is falling, in some ways it is an even bigger win for people who are never going to give up travel.”

Niraj Chokshi writes on aviation, railways and other transportation industries. More by Niraj Chokshi

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