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Domestic airline prices are already up 36% this year as customer demand continues to hold up in the face of higher fuel costs

Mar 24, 2022, 22:44 IST
Business Insider
An Airbus A320-216 passenger plane belonging to AirAsia.Marcio Rodrigo Machado/S3studio/Getty Images
  • US domestic flights are priced at about $300 on average, Bloomberg reported Friday
  • That is up 36% from the beginning of 2022 and about equal with 2019 prices.
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People are taking to the skies again, despite skyrocketing prices.

Travel company Hopper told Bloomberg that domestic round-trip flights in the US cost about $300 on average, the outlet reported Friday. That's up 36% from the beginning of 2022 and about equal with 2019 figures.

Consumers have been surprised at how fast airline prices have risen in the last several weeks, according to the Bloomberg report.

Cortney Skinner told Bloomberg she was looking into a trip to Colombia with friends in December, when tickets were about $400. When she went decided to purchase them a few weeks ago, the price had increased to about $800.

"Everyday, I watch the ticket prices like it's the stock market," she told Bloomberg.

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Airline CEOs in recent days have reported that demand is back — or almost back — to pre-pandemic levels. And with price increases potentially headed for the industry as the price of fuel has increased, consumers are and could be looking at even higher prices in the coming months.

In February, industry expert Linus Benjamin Bauer, founder and managing director of consultancy firm Bauer Aviation Advisor, told Insider that domestic fares worldwide would increase by an average of 6% each month until August.

"The rise of jet fuel prices is becoming another major headache to the aviation industry during the post-pandemic recovery process this year," he added.

While consumers would normally see a three- month delay between rising fuel prices and ticket fares, that might not be the case this year, as airlines have become accustomed to changing prices quickly amid various COVID-19 waves, experts told Bloomberg.

"We've moved past the demand that surfaced as we exited the omicron wave. Price increases at this point are attributable to jet fuel," Hopper economist Adit Damodaran told the outlet.

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Hopper had been covering this wave in demand, with Damodaran writing in mid-February that spring break flights leaving in mid-March would cost $290 round-trip, still 6% down from 2019.

"We'd recommend booking at least 3 weeks in advance to get the best deals," he wrote.

Booking early is essential again for travelers looking to fly on a budget. "The past two years lulled people into the sense that they can get cheap last-minute flights…That's not the case in normal times," Scott Keyes, founder of Scott's Cheap Flights, told Bloomberg.

Delta Air Lines declined to comment on whether it would raise prices more quickly than usual because of adjusting to COVID-era norms. (United Airlines did not respond to a request for comment, and Cape Air declined to comment. American Airlines pointed to CEO and Chairman Doug Parker's comments at the J.P Morgan 2022 Industrials Conference.)

Even before Russia invaded Ukraine, United's CEO said in the fall that higher jet fuel costs would drive up ticket prices.

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Glen William Hauenstein, president of Delta, said last week that the airline was confident it will be easy to offset fuel costs, considering demand is so high.

"I have never, and I don't think our revenue management team has ever, seen demand turn on so quickly as it has after the Omicron," he said.

Allegiant Air shared the following statement with Insider:

Demand for air travel is very high. Over the past few weeks, it's exceeded pre-pandemic levels. While fuel prices are a concern for the industry in general, Allegiant's business model allows us to adjust to high fuel price conditions with minimal impact on service. Our customers are leisure travelers who choose Allegiant because our fares are so low. We remain mindful of that during times like this, so when fuel prices rise, we make market adjustments instead of increasing fares. That means if we usually fly a route five days a week, we may reduce it to four days. Currently, we are planning to reduce capacity by 5 to 10 percent during off-peak months. This will allow us to save on fuel while continuing to offer our customers affordable options for their vacation travel with minimal disruption to their plans.

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