Everything seems to cost more these days — including airfare.
Indeed, last month, airfare was nearly 20 percent higher than it was in January 2022, according to the Consumer Travel Index – Q1 2023 conducted by Hopper, the travel pricing app. Interestingly, despite the increase, airfare was still around 6 percent less than it was for the same period in the pre-pandemic year of 2019.
The bad news for travelers on a budget, the Consumer Travel Index notes, is that the price of domestic airfare will continue rising modestly this month before accelerating this spring and early summer. Then, in mid-summer, the cost of domestic airfare will decrease again, Hayley Berg, lead economist at Hopper, wrote in the report.
“Though prices are expected to remain lower than 2022 levels for late spring and summer, airfare is expected to be higher than pre-pandemic levels, as costs remain high and demand continues to outstrip airline capacity,” Berg wrote.
When To Book Airfare
The average cost of domestic airfare will rise slightly to $277 this month, before increasing through spring and early summer.
The peak will be in May, when the average domestic airfare is expected to be just under $350 per ticket. That figure, by the way, will be 11 percent lower than airfare from May 2022, when the average cost of domestic airfare was around $400, Berg explains.
Specifically, domestic airfare will rise to $277 this month, before jumping to $308 in March, $326 in April, and finally peaking at $348 in May, according to Hopper. After that, the average domestic airfare is expected to decline slightly to $341 in June before dropping to $318 in July.
Why Airfare Remains High
There are three main factors behind the high cost of airfare.
First, of course, demand is surging.
“Demand for travel continues to surge post-pandemic, with 96 percent of Hopper users claiming they plan to take at least one trip in 2023,” Berg wrote in the report. “Sustained strong demand into 2023 will put additional pressure on prices, especially to and within regions where travel has only recently reopened like parts of Asia.”
Secondly, airline capacity is still constrained.
On the one hand, domestic seat capacity in January was higher than it was in January 2019 by about 6 percent, Berg explains. One reason for that increase is that airlines have increased capacity by replacing smaller planes with larger jets to meet demand with a decreased number of flights.
However, passenger demand still outstrips airlines’ seat capacity.
Finally, airlines struggle with the increasing cost of jet fuel.
“Jet fuel prices were already high in early 2022 as a result of supply constraints worldwide when the Russian invasion of Ukraine and resulting supply uncertainty put immense upward pressure on prices,” Berg wrote. “Today, jet fuel prices are at the highest levels seen since 2008 and are averaging $3.75 per gallon, an increase of more than 51 percent compared to January 2022 and twice the price in January 2019.”
Furthermore, jet fuel prices are likely to continue climbing as passenger demand itself continues to rise. That demand was further boosted by high numbers of Chinese travelers who recently journeyed to celebrate Lunar New Year as well as the skyrocketing number of Chinese who are resuming travel now that the country’s COVID-19 travel restrictions have been lifted, according to The Wall Street Journal.
The cost of jet fuel accounts for somewhere between 15 and 30 percent of an airline’s operating costs, Berg notes. Consequently, airlines will be pressured to maintain higher airfares so they can, in turn, compensate for their higher operating costs driven by the price of jet fuel.
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