Flight Prices Are Primed for Takeoff, According to United CEO

Ticket prices for flights have been descending throughout 2024. Prices have been down 6% year to date, nearly 10% since pre-pandemic, and remain on par with prices from June 2009, according to the Federal Reserve Bank of St. Louis.

Scott Kirby, the CEO of United Airlines, sees a different trajectory for prices. In the post-Covid travel craze, airlines quickly added more seats to feed travelers’ wanderlust. They’ve met demand for revenge travelers but have recently faced a glut of empty seats. To fix that, United and other legacy carriers are collectively slimming down their fleets to restore equilibrium to the law of supply and demand.

In United’s earnings call on Thursday, Kirby said supply will be reduced by mid-August, and airfares are primed to skyrocket because of it. What’s more, he believes tickets are currently underpriced by 50%.

Here’s an analysis of Kirby’s statement and what you can do to push back against (or prepare for) potentially rising airline prices.

Demand Isn’t Going Anywhere, and Prices Won’t Either

So far this year, TSA numbers are up 6% compared to 2023. Even with sticky inflation, Bank of America’s 2024 Consumer Spending and Saving Behaviors survey shows 81% of travelers aren’t slowing down any of their travel plans. So while Kirby is right about high demand, is he right about how much people are willing to pay as airlines reduce the inventory of seats?

Sure, reducing the supply of seats should tilt in the airline’s economic favor as wanderlust remains a strong desire for many. However, consumers are simultaneously apt to choose low-cost carriers like Spirit and Frontier, especially as they have adjusted their flight routes to increase competitiveness.

Additionally, airlines are reconciling for permanently lost business travel revenue. A recent Deloitte survey noted that more than half of corporate compliance departments are pushing or requiring workers to book cheaper flights to save money. This comes as business travel still hasn’t fully recovered from the pandemic, with some saying it will never return to what it once was.

Moving forward, if legacy carriers get greedy and raise their prices after reducing seat inventory, they could find price-sensitive consumers retreating to budget airline options, along with continued cutbacks from corporate travel. If prices skyrocket because of decreased supply, airlines could find themselves with waning demand and a consistent issue: too many empty seats.

How Consumers Can Beat the Airlines At Their Own Game

I’ve felt the sting of paying high prices recently for flights; it’s not a fun feeling. But there are plenty of ways to lessen, or even dodge, paying full price for your next adventure. Here are the steps to know.

Book As Far Ahead As Possible

Airlines have largely shifted to a dynamic pricing model in which cost fluctuates as demand goes up and down. In many cases, tickets far in the future have less demand, so booking well in advance gives you a chance to save money.

Be Flexible About Where You Sit

If price is your largest concern, booking a ticket without an assigned seat is an easy way to save. That’s where a Basic Economy booking might make sense for you. If I’m flying alone in economy, I let the airline choose where I sit, as I don’t have a strong preference.

Wake Up Early, and Fly On Off Days

Thankfully, I’m a morning person, so a 5 a.m. flight isn’t the worst thing in the world — especially when these can be much cheaper than an 11 a.m. ticket. Moreover, aim to fly on Tuesdays and Saturdays, as they are typically the lowest traffic days. Looking at prices 1 or 2 days before or after your originally planned date can help save money, as well, assuming your plans are flexible.

Don’t Worry (So Much) About Maximizing Your Miles

Some points and miles nerds can get into the nitty-gritty of maximizing each point to achieve the highest cent per point (CPP) in value. Yes, it’s one way to stretch each point to the fullest extent, but as long as you’re achieving an acceptable valuation for your points, use them.

For example, we value Delta SkyMiles at 1.2 cents per mile. If you spend 40,000 miles on a $400 round-trip flight, this gets you 1 cent per point. Yes, it’s slightly less, but $400 in your pocket is much better than hoarding your miles, as they can be devalued at any time.

Final Thoughts

Kirby’s prediction seems to be a pretty rudimentary economic thought process designed to appease shareholders, telling them that travelers will continue to spend even more money on flights. Yes, there are too many airplane seats in the sky right now. However, legacy carriers cutting supply to bolster prices and believing that their tickets will remain competitive against low-cost carriers is a strong gamble.