Airfares at America's three largest domestic carriers – American Airlines, Delta Air Lines and United Airlines – are up by nearly 50 percent for the week ending on May 23 compared to a year ago.
Month-over-month prices are no better. April airline fares soared by 18.6 percent compared to March, and March's airfares increased by 10.7 percent. (Related: American fuel prices about to breach $5 per gallon mark just as country enters summer travel season.)
Airfares have been falling for the past 40 years, ever since the federal government deregulated the airline industry in 1978, which led to the rapid expansion of the airline industry and more Americans choosing to fly to their destination rather than take their cars or other forms of public transportation like trains and buses.
In the last decade, following the effects of the Great Recession, the downward trend in airline ticket prices flattened out. This is the first time in nearly half a century that airfares are once again increasing.
The Bureau of Transportation Statistics has not yet released its data for the first half of the year, but estimates from market analysts suggest that prices have increased by between 33 percent to 40 percent since January. This would mean average ticket prices have increased by, at best, an eight-year high of $430 or, at worst, a 22-year high of $460.
Robert Mann, owner of airline industry consulting firm R.W. Mann & Company, noted that rising airfares are "all based on the supply of airline seats and demand." Since there are fewer seats than people looking for flights, this partly explains the rising airfare costs.
"There is some cost pressure, but that usually comes out of the airlines' margins," said Mann.
A report from the Mastercard Economics Institute shows that more and more Americans are booking domestic and international flights. The rate at which flights are filling up has not been seen since before the Wuhan coronavirus (COVID-19) pandemic. By the end of April of this year, flight bookings were up 25 percent compared to pre-pandemic levels. No data have yet come in May but it is likely even higher.
Other factors contributing to rising airfares include inflating jet fuel prices. Year-over-year prices for jet fuel are up by 116 percent as the inability of the administration of President Joe Biden to pump more oil into American supplies starts affecting the airline industry.
Surging labor costs and other operating expenses are also making airfares increase. According to Mastercard, industry wages and salaries have risen to 22 percent of all revenues. Other operating expenses like landing fees, maintenance and repair costs are also elevated.
Airlines are also still struggling to recover from the impact of the economic restrictions imposed upon the industry due to the COVID-19 pandemic. Travel all but vanished for much of the pandemic and it forced most major airlines to radically scale down the size of their labor forces, resulting in today's staffing shortages.
Mann noted that many airlines are also still working through operational kinks that keep operating costs elevated, such as COVID-19 restrictions still in place like pre-departure 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," said Mann. "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."
He added that it is also not unusual for airfares to increase by roughly 30 percent during the summer months compared to the rest of the year. But this would only explain part of the rising airfares.
Learn more about inflation in America at Inflation.news.
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