Why Airfares Have Risen Five Times Faster Than The Overall Inflation Rate

Primbondh/ November 23, 2022/ airfare

Airfares rose 0.8% in September — twice as fast as the rate for all items — according to Consumer Price Index (CPI) data released Thursday by the Bureau of Labor Statistics.

On an annual basis, however, airfare inflation was up a massive 42.9%, the highest on record and more than five times higher than the overall inflation rate of 8.2%. Last month’s CPI report showed airfares rising 33% annually.

Airline ticket prices have climbed much faster than overall inflation during the pandemic recovery due to several factors. The industry ground to a virtual standstill in the earliest days of the pandemic and recovery was initially slow. Russia’s war in Ukraine has driven up fuel costs substantially and, in recent months, an extraordinarily strong rebound in travel demand has collided with massive challenges to supply, including labor shortages, aircraft delivery delays and other issues.

Now, despite inflation, major airlines appear bullish about the future.

“Global demand is continuing to ramp as consumers shift spend to experiences, businesses return to travel and international markets continue to reopen,” Delta Air Lines CEO Ed Bastian said on an earnings call Thursday. The company reported third-quarter net income of $695 million, down from a $1.5 billion profit for the same quarter in 2019.

Meanwhile, United Airlines has just put in a multi-billion dollar order for 100 widebody jets, reports Reuters, to go along with a big schedule increase in 2023 for trans-Atlantic travel.

Expect High Holiday Airfares

Ticket prices will remain high going into the holiday season, according to the deal-finding site Hopper, whose Holiday Travel Outlook report shows that Thanksgiving airfare prices are currently up 25% from last year but in line with 2019 prices.

Even worse, Christmas airfares are going to be higher than in the last five years, up 55% from last year and 19% higher than before the pandemic.

In a recent Hopper survey, 70% of respondents said that visiting family or friends was the main reason for a trip this holiday season. For more than half of travelers, it will be the first time they’re traveling since the start of the pandemic.

For many Americans making holiday plans, higher airline prices are a concern, with 67% of respondents saying price and finding a good deal was their top priority when planning holiday travel. A whopping 87% of millennial and Gen Z travelers said higher airfare prices are a concern as they’re planning their holiday travel.

Besides price, flight disruptions are another big concern, with 42% of travelers said they are worried about delays and cancellations impacting their holiday travel plans this year.

This past summer, the peak tourist season was marred by rampant flight disruptions and “airport chaos” headlines, with airports around the world often tallying tens of thousands of flight delays and cancellations every day.

But travelers should know that over recent months, the number of daily flight disruptions has shrunk ten-fold, according to FlightAware tracking data, which is a promising sign going into the holidays.

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