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Why Are Airfares So High
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Higher Airfares Drive American Airlines To Big Fourth Quarter Profit
Travelers may feel a hit in their wallets this year as higher fuel prices and strong demand drive up airfares.
On Tuesday, the Adobe Digital Economy Index released data revealing that travelers spent $8.8 billion on online flight bookings in March, which is an increase of 28% compared to the same period in 2019. in March 2019, the data showed.
Additionally, in the first quarter of 2022, consumers spent a whopping $21 billion on domestic air travel. To put that number in perspective, passengers spent a total of $56 billion in 2021, according to Adobe.
The rising ticket prices can be attributed to the increase in travel demand and fuel costs. The price of jet fuel, which is the second biggest expense for airlines after labor, has risen since the crisis between Russia and Ukraine disrupted global distribution of crude oil.
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Data from the US Gulf Coast show that jet fuel settled at $3,343 per gallon on April 11. The price is about 35% higher than the beginning of 2022, which saw a fuel price of $2,195 per gallon on January 3, and double the price at the same time last year.
Fuel prices have contributed to surprise inflation, which is growing this year at the fastest pace since 1981, according to a US Labor Department report released Tuesday. Airfare inflation led to a 20% increase in prices in March 2022 compared to March 2019, according to Adobe data. For comparison, the data showed that airfares increased by 5% in February and actually decreased by 3% in January.
Meanwhile, data from the travel app Hopper shows a 40% increase in air travel from the beginning of 2022, with a domestic return ticket costing $330. The company predicts that ticket costs will increase by another 10% in May.
Typically, the changes will be reflected in the airline's fare over the next few months, but Hopper explained that the "extent to which it appears may vary depending on the airlines' hedging program and how much of the cost is passed on to the consumer .” However, it is possible for airlines to absorb some of those costs, the company said.
Get Ready For Higher Fares: Airlines Bet Surge In Travel Will Help Offset Fuel Costs
Hedging is a strategy that some carriers, such as Southwest Airlines, use to ensure that they are not hurt by unexpected increases in jet fuel prices, such as the increase caused by the war in Ukraine. The company agrees to buy months or years of fuel in advance at a fixed rate, allowing it to offset rising costs.
According to media outlet Axios Atlanta, Southwest hedged about 64% of the fuel for the rest of 2022, while rival American Airlines stopped hedging in 2014.
Although consumers may be put off by higher ticket prices, they are willing to pay more than ever for flights after two years of travel restrictions, CNBC reported.
Delta Air Lines CEO Ed Bastian told the Associated Press that bookings were not deterred by the pandemic or inflation, saying "the last five weeks have been the highest bookings in our history." The company lost $940 million in the first quarter of 2022, mostly due to the increase in fuel prices.
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He also said that travel demand will remain strong enough in the next two to three months to allow Delta to cover the higher cost of fuel, the AP reported.
That was one of the tips that David Pekoske, head of the Transportation Security Administration, gave when he was recently asked about the upcoming summer travel season.
The vatanati are facing a perfect storm this summer. People are arriving again, many for the first real summer vacation since 2019, while airlines have not replaced all the staff they lost during the pandemic, leading to delays and cancellations.
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Along with high demand for travel, fuel prices are driving air travel to the highest prices in more than five years this summer, according to Hopper, an online travel site that analyzes prices.
"It's going to be very busy and very expensive," said Brett Keller, chief executive of the travel website Priceline.
Record diesel prices are hitting consumers in hidden ways. This is because diesel drives the economy, powering trucks, agriculture and other important industries.
His advice: Book early, remember to fly to smaller, less crowded regional airports and be flexible with the days you plan to travel.
Inflation May Already Have Peaked For Airfare, Hotels, And Meat
Here are six charts, using travel industry and other data, that help explain why flights are so expensive right now—and why we're in a season of summer travel chaos.
Fuel and salary are two of the biggest costs for airlines. Jet fuel prices this summer are roughly double what they have been over the past few summers.
And demand for air travel is increasing: Summer travelers will experience the kind of crowds not seen since 2019, before the pandemic and lockdown took a toll on travel.
Pekoske, the TSA administrator, said the agency expects more than 3 million travelers to pass through U.S. airports on at least one of the busiest days this summer, surpassing the previous record of 2.8 million per day in 2019.
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The result for the average traveler this summer: Fares for flights from June to August are 47% higher than in 2021 and 34% higher than in the same period in 2019.
Hotel prices in April were more than double what they were two years earlier and are expected to remain high in the summer.
The surge in travel demand comes as airlines struggle to bring staff back to full employment levels they had before the pandemic. Many former airline workers who have been laid off have left the industry for jobs with less stress and better pay, industry experts say.
Bad weather and coronavirus outbreaks have been blamed for a sharp increase in cancellations in January, and experts say more cancellations are expected during the summer travel season.
This Is Why Airline Ticket Prices Are Sky High Right Now
Keller warns that without full staffing, airlines "don't have as much slack in the ecosystem" to pick up replacement pilots, flight attendants or mechanics in the event of a major storm or mechanical problem that requires extra help.
John Jimenez, a facilities maintenance worker in San Jose, thought about taking his wife and two children to Phoenix in August to meet his newborn grandson until he calculated the total price for the plane for four people: more than $1,000.
Before the pandemic, he paid about $115 per person for the round trip — about half the current fare.
"I don't see spending that much for a quick trip," he said, adding that driving to Phoenix would also be a pain in the wallet because of steep gas prices.
Fewer Flights And Higher Ticket Prices Make Air Travel A Luxury For Many
See L.A. Times Today at 19.00. on Spectrum News 1 on Channel 1 or live stream on the Spectrum News App. Palos Verdes Peninsula and Orange County viewers can watch on Cox Systems on channel 99.
Hugo Martín is an assistant editor on the Fast Break Desk, the news team of the Los Angeles Times. He has been a journalist with the Los Angeles Times for more than 30 years, covering politics, transportation, travel, business and the outdoors. A native Californian, Martín was part of the Pulitzer Prize-winning Metro staff in 1993, 1995 and 1998. He is an avid outdoorsman, proud father and die-hard Lakers fan.
Thomas Suh Lauder is assistant editor for data and graphics, specializing in information graphics and digital mapping. He has been with the Los Angeles Times since 2000, where he developed data visualizations for Pulitzer Prize and Scripps Howard Award projects.
Vanessa Martínez is a data and graphic journalist. Before joining the Los Angeles Times in 2017, she worked at the Seattle Times and the Southern California News Group. She graduated from Cal State Fullerton. This post contains references to products of one or more of our advertisers. We may receive compensation if you click on links to those products. The content on this page is accurate as of the date of posting; however, some of the listed offers may have expired. For more information check our Advertising Disclosure.
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