There is finally some good news for travelers, as airfares saw a significant decrease for July, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS) on Aug. 10.
While the all-items index for the 12 months ending July decreased to 8.5% — still a high figure — the index for airline fares fell sharply in July, decreasing 7.8%. This follows the much more modest 1.8% decrease in June. It’s important to note, however, that on a year-over-year basis, airline fares are up a whopping 27.7%.
Drop in Airline Ticket Fees Could Give American Travelers a Break
However, the decrease might provide some breathing room for American consumers who have been drastically cutting down their spending. As Bloomberg reported, U.S. airline bookings decreased 2.8% in June — compared with May, based on data collected by Adobe Analytics — while online spending on tickets fell 5.7%, to $7.9 billion, over the same period.
“A myriad of factors play into this decrease in airline fares, notably reduced costs of crude oil as well as increased demand for air travel,” John Catsimatidis, chairman and CEO of Red Apple Group (and chairman and CEO of Gristedes & D’Agostino’s Supermarkets), told GOBankingRates. “With the euro and dollar being close to 1:1, we are seeing Americans more inclined to travel to Europe. I anticipate that airline fares will continue to fall in September.”
In turn, it might be time to plan on fall or winter flying. Research from booking platform Hopper shows that domestic airfare could drop to $286 in August, down 25% compared to the airfare price peak in May of this year.
In addition, Hopper’s Late Summer Travel Index projects that average domestic airfare will remain at or below $300 through September, before beginning to rise in October and November. Airfare is projected to average $368 per ticket in December, with daily airfare peaking over $390 for last-minute holiday bookings.
Hopper Suggests Fuel Prices, Demand to Blame for High Airfare
Hopper adds that two major drivers of higher prices included soaring jet fuel prices and increased post-pandemic demand. This fall, demand seasonality and jet fuel prices are the primary drivers of airfare.
Edward Moya, senior market analyst for OANDA, told GOBankingRates that airlines have had a tough year as they battled staffing shortages, severe weather, and widespread inflation.
“The bar was set high for a robust summer traveling season as many Americans were planning long awaited vacations. With a disappointing summer travel season so far and a lack of return of business travel, the airlines have not fared well at all,” Moya added.
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