What Inflation? Airfares Are Plummeting 25% This Month
Didn’t get around to taking a summer vacation? It’s time to book your trip, as airfares are dropping fast to pre-pandemic levels.
As demand for summer travel abates, Americans who held out for a late-August or post-Labor Day getaway will be rewarded for their patience.
Domestic airfare will drop to $286 round-trip later in August, down 25% compared to the $400 peak price for summer airfare in May, according to the third-quarter travel index from Hopper, the online booking platform. The average airfare will remain at or below $300 through September, before beginning to rise in October & November and eventually peaking over $390 for last minute holiday bookings in mid to late December.
That brings prices back in line with 2019 levels, says Hayley Berg, Hopper’s lead economist and author of the report. Late-summer airfares typically drop between 10% and 15% between late August and early October as demand declines for back-to-school season in the U.S. But this year’s tumble from the highs of summer is steeper than usual.
So what is driving airfares down so quickly? In large part, this is a market correction. “Prices this summer were elevated beyond normal seasonal airfare increases by high jet fuel prices and pent-up demand coming out of two depressed summer seasons, and by traveler demand peaking earlier in the summer than in a normal year,” says Berg in her report.
Meanwhile, other factors continue to put upward pressure on airfares. Jet fuel prices have risen rapidly this year following Russia’s invasion of Ukraine in February. U.S. Gulf Coast jet fuel is averaging 85% higher than in 2019 and 86% compared to 2021, according to data from the Energy Information Administration (EIA).
And passenger capacity is also down compared to pre-pandemic levels. “Available domestic seat capacity in July was at about 95% of 2019 levels, averaging 2.7 million available seats per day compared to 2.87 million per day in 2019,” notes Berg.
The Transportation Security Administration (TSA) is consistently screening 10% fewer travelers than in 2019, exceeding pre-pandemic volume on only a handful of days this year, over the long Memorial Day and Fourth of July weekends.
As airfares plummet, beach destinations top the Hopper’s trending list for domestic travel, with all cities in Hawaii (airfares are averaging $500 or less) and Hilton Head, South Carolina ($315 roundtrip) in the top three destinations for fall. Mountain towns are also trending upward, with Jackson, Wyoming ($460 roundtrip) the destination rising the fastest in popularity for this autumn.