There are signs that airfare inflation is finally impacting travel demand, according to comprehensive new data from Adobe Analytics, which crunched 150 billion visits to travel, leisure and hospitality websites to look at bookings for domestic flights at six of the top 10 U.S. airlines.
Overall, it’s been a banner year for airlines. Last month, each of the largest legacy U.S. carriers reported third-quarter revenue in the double-digit billions.
Domestic flight bookings in the first 10 months of 2022 have driven $76 billion in online spend compared $65 billion in the same period in 2019, the last year before the Covid-19 pandemic, Adobe found.
That 17% jump in airline ticket sales was driven by a combination of more bookings — up 5% compared to pre-pandemic levels — and higher fares.
Prices have moved upward throughout the year. In October, airfares for domestic flights were up 2% compared to September and up 24% over 2019 levels, according to Adobe’s calculations.
Airfares have climbed much faster than overall inflation for several reasons. Russia’s war in Ukraine has driven up fuel costs 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.
“After record spending on physical goods in the first two years of the pandemic, we see consumers shifting more significantly towards services such as air travel,” said Vivek Pandya, lead analyst at Adobe Digital Insights. “We expect the momentum to carry through the holiday season, even as prices remain elevated above pre-pandemic levels.”
Up until now, passengers have been willing to pay higher ticket prices, which have more than offset airlines’ rising costs. But Adobe’s research indicates that consumers may finally be starting to chafe at sky-high ticket prices.
Domestic flight bookings for the week of Thanksgiving are down 7% compared to 2019. And looking ahead to Christmas travel, domestic flight bookings are currently down 17% compared to where holiday reservations were at this time in 2019.
“The slower bookings growth indicates that some consumers may be waiting to see if prices come down materially,” said Adobe in its report, “while others may pursue alternate forms of travel, such as by car or train.”
The deal-finding site Hopper’s Holiday Travel Outlook report found that 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.