US airfares are falling, and at a faster rate: Government report – National

Travelers received some welcome news from the government in Wednesday’s inflation report: Airfares are falling, and at a faster rate.

The price of the average plane ticket fell 7.8% to $311 in July after falling 1.8% in June, the government said on Wednesday.

Lower petrol and travel prices were key reasons why headline inflation slowed somewhat in July, although consumer prices were still up 8.5% yoy.

But before they celebrate with a fancy trip, travelers should be aware that average ticket prices in July were still 27.7% higher than in July of last year.

Airlines have been able to raise fares as demand — at least from leisure travelers — meets or exceeds pre-pandemic levels, while airlines are operating fewer flights. The airlines are also citing fuel prices, which have roughly doubled since 2019.

Tariffs peaked in May when sales for the summer holidays were in full swing.

Prices typically fall in late summer and early fall, when the holidays end and children return to school. However, the decline this year is expected to be more dramatic than usual. That’s partly because summer prices have been so high, and the cost of jet fuel has also fallen by about a quarter since late April.

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Travel data researcher Hopper expects U.S. domestic prices to average $286 in August and remain at or below $300 through October as many people book Thanksgiving and Christmas holidays and demand pushes prices back up.

It is unclear whether inflation and a possible recession will affect the willingness to travel.

Matthew Klein, Spirit Airlines’ chief commercial officer, said on Wednesday that bookings remain strong and any drop in fares will follow the normal seasonal pattern, which he described as good news for airlines’ earnings.

Klein said Spirit executives wondered if demand “after Labor Day and beyond would just fall off a cliff, and we’re not seeing that right now. We continue to be quite impressed with the volumes coming through.”

This reflected similar recent comments from officials at other airlines.