Airfares Surge 50% As Domestic And International Travel Rebound

More Americans are taking to the skies this summer than there are available plane seats, driving up ticket prices as airlines grapple with surging fuel costs, staffing challenges and smaller fleets.

Airfares at American Airlines, Delta Air Lines and United Airlines — the three largest domestic carriers — shot up nearly 50% for the week ending May 23 compared to a year ago, according to an analysis by Cowen, a financial services firm. Cowen tracked nearly 300 routes across four different fare categories for the carriers using data from New York-based Harrell Associates, which tracks airline pricing trends. 

A report from Mastercard Economics Institute shows consumers are booking domestic and international travel at a rate not seen since before the pandemic. By the end of April, flight bookings were up 25% compared to pre-pandemic levels, with the report's authors noting an "unprecedented surge" in international trips, based on anonymized spending data from Mastercard cardholders. 

"Capacity is strained"

Another challenge for airlines: managing rising labor costs. Industry wages and salaries as a percentage of sales have risen to 22%, according to Mastercard. Landing fees, maintenance and repair costs, and other operating expenses are also elevated. 

But rising airfares are "all based on the supply of airline seats and demand," said Robert Mann, owner of airline industry consulting firm R.W. Mann & Company. "There is some cost pressure, but that usually comes out of the airlines' margins," 

It's also not unusual for ticket prices to soar roughly 30% in the summer months, compared to the rest of the year, according to Mann. 

Airlines continue to recover from the impact of the pandemic, when travel all but vanished, as well as work through operational kinks including pre-departure COVID-19 testing requirements for passengers heading to other countries. 

"Some of the biggest long-haul international planes are still not fully deployed and others aren't yet available," Mann said. "So capacity is strained and there is a surplus in demand, and that's why we have rising prices. It is simply the market responding to an excess of demand over supply." 

First published on June 2, 2022 / 6:12 PM

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