Air Fares on the Decline?

Sky-high ticket prices have been a theme of air travel during its big comeback following the COVID-19 pandemic. But now, that finally may be changing, bringing some relief for travelers.

Prices falling?: Several U.S. airlines have revealed that average ticket prices for flights are declining to levels below projections.

• U.S. air fares in June declined over 8 percent compared to a month earlier, according to the U.S. Bureau of Labor Statistics, the largest decline in nearly a year and the second largest since the start of the pandemic.
• Alaska Airlines, American Airlines and Southwest Airlines are among several U.S. carriers that recently revealed a decline in domestic air fares, with each adjusting their future forecasts for slower revenue growth.
• Ticket prices are mirroring inflation trends, with the U.S. consumer price index rising at a slower-than-expected 0.2 percent in June, according to the U.S. Bureau of Economic Analysis.
• International air fares are heading in the opposite direction, however: up 8 percent year-over-year and 23 percent higher than 2019. Delta Air Lines, for example, reported a 61 percent increase in international revenue from 2022.

Strong demand rolls on: Despite dropping ticket prices and fears of a looming economic recession, demand for air travel is showing no signs of slowing down, according to industry leaders.

• TSA made history during the Fourth of July travel period when it screened nearly 2.9 million passengers nationwide on June 30, the most ever in a single day by the agency and surpassing pre-pandemic numbers.

What they’re saying: Airline executives were bullish on the industry’s prospects on the latest round of earnings calls.

• “As we approach the rest of the year and beyond, it is clear our environment is evolving as domestic leisure fares have recently started to come down from their peaks,” Alaska Airlines CEO Ben Minicucci said on the airline’s quarterly earnings call July 26.
• “Air travel demand is strong and the consumer is in good financial shape, particularly the premi