Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is much cheaper than last year, providing welcome relief to consumers who have been frustrated for months by the high prices of all types of goods and services. .
The glut of deals suggests the airline industry’s supercharged pandemic recovery may finally be slowing as ticket supply catches up and, on some routes, outpaces demand, which appears relatively strong.
Consider the recent ratings of Denise Diorio, a retired teacher in Tampa, Florida. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month.
“I’ve been telling all my friends, ‘If you want to go somewhere, buy your tickets now,’” he said.
The deals he found may be exceptional, but Diorio is right that they are plentiful.
Earlier this month, the average price of a domestic flight around Thanksgiving was down about 9 percent from a year earlier. And flights on Christmas were about 18 percent cheaper, according to Hopper, a booking and price tracking app. Kayak, the travel search engine, looked at a broader range of dates during the holidays and found that domestic flight prices dropped about 18 percent around Thanksgiving and 23 percent around Christmas.
“In many cases, we’re seeing some of the lowest fares we’ve seen since travel started coming back after the dip in 2020,” said Kyle Potter, executive editor of Thrifty Traveler, a travel blog and tracking service. offers.
Domestic ticket prices fell over the summer, Potter said, and deals on international travel, particularly to Europe, have become more common recently.
Airlines reduce their fares as they try to get more people to book tickets as demand is slowing or they face tougher competition. There’s no doubt that competition has intensified on some routes, but travel experts say it’s unclear whether demand is slowing.
This year’s Thanksgiving is expected to set a record for air travel, with nearly 30 million passengers forecast, according to Airlines for America, an industry group. That would be about 9 percent more than last year and 6 percent more than in 2019, before the pandemic.
But some airlines say demand is slowing outside of holidays and other peak travel periods. Additionally, some airports have been so inundated with flights that airlines have been forced to reduce fares to fill planes.
That hadn’t been a big problem during most of the pandemic recovery. Weather and other disruptions limited flight supply last year and in 2021, as did shortages of trained pilots, spare parts and planes, among other factors. That raised ticket prices, kept planes full and helped airlines make strong profits.
“The airline industry has never generated the types of profit margins and return on equity that it has achieved over the last two and a half years,” said John Grant, chief analyst at OAG, an aviation data and advisory firm. “We’re getting back to a more normal industry.”
For America’s largest airlines, the good times have continued, driven in particular by growing demand for international travel. But smaller, low-fare airlines have begun to suffer. Several reported disappointing financial results for the three months ending in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flights difficult.
JetBlue Airways, for example, lost $153 million in the third quarter, compared with a profit of $57 million in the same period last year. The company recently said it was moving flights from crowded markets, such as New York, to those where it expected to perform better, such as the Caribbean. Low-cost carriers Spirit Airlines and Frontier Airlines recently told investors they were looking to cut costs by tens of millions of dollars.
Competition has been fierce in some major markets, driving down rates and profits.
In Denver, where Frontier is based, there were about 14 percent more seats available on flights this summer than in the summer of 2019, according to Cirium, an aviation data provider. Miami and Orlando, Florida, two popular destinations served by many low-cost airlines, saw even larger increases in capacity.
But while airlines added flights in popular markets as they chased passengers, airports in other cities, including Los Angeles, a hub for several major airlines, saw big drops in capacity since the summer of 2019.
“You’ll find that there’s a huge correlation between airlines that are doing well and those that are struggling, in terms of margins, when you compare where their concentrations are,” Frontier CEO Barry Biffle said last month in a conference. Call to discuss the airline’s third quarter results.
When it comes to international routes, analysts are less sure why fares are falling and whether they will remain low. The kind of deals Diorio secured for his trip to Paris could mean that larger airlines soon face a financial squeeze or simply that the industry is returning to pre-pandemic normality.
“Historically, demand to Europe softens in the winter,” said Steve Hafner, CEO of Kayak. “So I think that reflects normal trends.”
But demand for international travel could face challenges, in part because of wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than in recent years, when they could take advantage of pandemic savings. 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 break for travelers after 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.”
