Airline Fares Down Nearly 6% Despite Record Demand

The most recent Consumer Price Index released June 12, 2024, indicated airline fares are descending.¹ In the last year (May 2023 to May 2024), airline prices are down 5.9% – a positive sign for travelers who have felt the sting of soaring ticket fares over the last few years. This comes on the heels of record numbers of travelers going through TSA checkpoints, with the second-highest number ever recorded on May 24, 2024.² Moreover, the number of passengers from 2023 to 2024 (to date) is up 6%, according to TSA traffic data.³ And this all comes when airlines are flying fewer planes⁴ as they navigate production issues from Boeing and Airbus.

As demand appears to outperform supply, prices are still pulling back from inflationary highs due to these few factors.

Lower Jet Fuel Prices

Jet fuel prices have reduced at more than double the rate of airfares, as they were down 15.1% year over year for the week ending June 7, 2024, according to the International Air Transport Association (IATA). This is part of a larger pullback, as the energy index fell 2%, according to the recent CPI report.

This price drop represents significant savings for commercial airlines as fuel accounts for an estimated 20% to 30% of an airline’s overall expenditures.

Airlines Consistently Adding Routes

Despite fewer planes flying, airlines continue to open up new routes as they aim to maximize the planes they have in their fleets. Here are a few airlines that have recently announced new routes (and their respective new paths in the sky):

• Alaska Airlines has added a few routes in and out of Los Angeles (LAX) and San Diego (SAN), continuing its West Coast dominance.
• American Airlines has added 7 new routes to its network and expanded on 16 already established flight patterns.
• Delta Air Lines announced specialty flights for the upcoming college football season.
• Frontier Airlines has added 7 new transcontinental routes across its domestic network starting August 2024.
• JetBlue has expanded routes in Puerto Rico and the Caribbean, along with adding routes with Mint business class seating.
• Southwest Airlines has added both domestic and international flights.

Fares Trending Cheaper Over Time

Travel continues to become cheaper over time. Adjusted for inflation, the average airfare price fell from $584 to $382 between 1995 and 2023, a nearly 35% decline, according to the Bureau of Transportation Statistics. Even since 2018, fares are down 10.1%.

Carrier Competition Benefits Consumers

Typically, the less competition there is, the more pricing power consumers have. However, the airline industry seems to defy this rule of thumb. The 5 largest carriers (Alaska, American, Delta, Southwest, and United) have absorbed more than 40 other operators since 1960. This has had regulators concerned for many years about a lack of competition and even led to a federal judge blocking a proposed merger between Spirit and JetBlue. These efforts to prevent more consolidation have been critiqued by many as an overreach, but it appears to be working in the favor of consumers.

And now, legacy carriers are fighting an even heavier battle over high-density routes, driving prices down even further into the territory of budget carriers. Options like basic economy on United and Delta have soared in popularity, and lower overall airfares are pushing airlines like Spirit and Frontier into unprofitability.

While it’s been a battle for airlines to remain in the sky, it remains the most price-aggressive market for travelers.

Final Thoughts

The last few years have been rough economically. Inflation levels not seen since the 1980s have pushed consumers to the brink, and it can sometimes feel as if higher prices are inescapable.

However, as a journalist and consumer, I enjoy putting things into context for myself and Upgraded Points’ readers. Yes, travel has become more expensive when you take an entire trip into context, but airline prices continue to descend over the long term. Travelers can digest this as a glimmer of hope as higher prices for food, rent, and other essentials continue to negatively impact consumers.