Cheap Airfares Aren’t Coming Back, Airline Executives Say

With travel demand at its highest and supply struggling to keep up, airfares have skyrocketed, leading to massive revenues for airlines, and it looks like that is not going to change.

Indeed, Airline executives have announced that cheap airfares are now history due to the high demand for travel and the limited number of seats available, meaning things will stay that way.

Their justification is the surging costs for fuel and labor, intertwined with delays and worker shortages, preventing airlines from adding more flights to their schedule.

According to the U.S. Labor Department, the consumer-price index for airfare in September was forty-three percent higher than the previous year. Ticket prices last year remained low but increased in the CPI by eight percent for September 2019, according to trade group Airlines for America.

After a difficult start to the summer, defined by cancelations, baggage losses, and delays, the airline companies have finally managed to stabilize their operations. They have managed to do so while dealing with a significant lack of scheduled flights, with industry executives now saying growth will be closed in for the near future.

Cheap airfares not likely to return

Andrew Watterson, Southwest Airlines Co’s chief operating officer said, “It’s unusual. You have demand quickly outstripping supply like this.”

“I think we have a couple of years where demand and supply may not be as aligned as it was pre-pandemic,” he added.

For airlines, this is a positive turn of events, as the higher fares help cover an approximate eighty percent increase in fuel prices and revenues. Even though those prices have shifted in recent months, industry experts do not anticipate low fares anytime soon.

Domestic flights in March 2023, for example, are on average $350 for a round trip ticket. That is twenty-six perxent higher than this time last year and twenty-eight percent above 2019. Yet, some changes could still take place, according to the booking app Hopper if future bookings do not come through.

The rising cost of flying in Europe

Things do not seem to be any different in Europe, where prices are also climbing. Ryanair, for example, Europe’s biggest airline in terms of passenger numbers, reported a fourteen percent increase in ticket prices over the summer compared to 2019.

“There has been a structural change in capacity in Europe over the last two years,” Ryanair Chief Financial Officer Neil Sorahan said in an interview. “The days of the kind of 9.99 euro ($9.98) fares are probably gone.”

Still, the higher prices haven’t massively influenced customer demand for travel yet. It could do so in the future, nonetheless, given increased prices for food, energy, bills, as well as other goods. This is especially the case as those costs would constitute a large chunk of people’s savings. Using savings for travel would leave people strapped for cash, said Kevin Healy, president and chief executive of Campbell-Hill Aviation Group, a consulting firm.

“The only thing pushing in the other direction is inflation,” he declared. “That hasn’t seemed to have as big an impact yet.”