Relief in sight? Airfares decline slightly after months of huge increases
Good news: Despite soaring prices elsewhere in the economy, the price of airfare declined slightly between May and June.
The move follows significant increases in airfare for much of 2022.
On a seasonally-adjusted basis, the cost of airfare declined 1.8% between May and June, government inflation data released on Wednesday shows. That followed huge gains of 18.6% between March and April — when airfare was a leading driver of the consumer price index's increase — and 12.6% between April and May.
Still, airfare is considerably more expensive than it was a year ago: up 34.1% from June 2021 to June 2022, on an unadjusted basis.
While any decrease is sure to be welcome news for budget-conscious flyers, some of the June decline might just be a function of the time of year.
With summer travel already in full swing, travelers are starting to look at booking flights for the fall. Fall fares tend to be less expensive than summer fares, because leisure demand is lower in the fall. Further adding to downward pressure this fall is the partial — but not full — recovery of business travel.
"Demand for travel typically slows in June, as May and June see the highest demand for summer travel," Hopper's lead economist Hayley Berg wrote last month.
More: Why are airfare and hotel rooms so expensive right now?
The travel firm last month saw its first drop in airfare for all of 2022, in-line with this morning's CPI data.
"Airfare remains 18% higher than 2019 prices today, but is trending downward in line with trends we typically see at this time of year," Berg wrote.
On the supply side, the high cost of jet fuel is also driving higher airfares, though the price of that has come down slightly in recent weeks.
Still, Delta Air Lines, which reported its second-quarter earnings on Wednesday, had a strong revenue forecast, even if airfares are coming down a bit.
"Looking forward, we are seeing demand and pricing strength carry into the late summer and fall as demand remains strong," Delta president Glen Hauenstein said during the carrier's earnings call.
David Slotnick contributed reporting.
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Why We Chose It
The Capital One Venture X Business Card has all the Capital One Venture X Rewards Credit Card has to offer and more. It offers an incredible welcome bonus and requires an equally impressive spend to qualify. In addition, the card comes with premium travel perks like annual travel credit. (Partner offer)Pros
- The Capital One Venture X business card has a very lucrative welcome offer.
- In addition, the card comes with many premium travel perks such as an annual $300 credit for bookings through Capital One Business Travel.
- Business owners are also able to add employee cards for free.
Cons
- The card requires significant spending to earn the welcome offer.
- Another drawback is that the annual travel credit can only be used on bookings made through Capital One Business Travel.
- LIMITED-TIME OFFER: Earn up to 400K bonus miles: 200K miles when you spend $30K in the first 3 months, and an additional 200k miles when you spend $150k in the first 6 months
- Earn unlimited 2X miles on every purchase, everywhere—with no limits or category restrictions
- Earn 10X miles on hotels and rental cars and 5X miles on flights and vacation rentals booked through Capital One Business Travel
- With no preset spending limit, enjoy big purchasing power that adapts so you can spend more and earn more rewards
- Empower your teams to make business purchases while earning rewards on their transactions, with free employee and virtual cards. Plus, automatically sync your transaction data with your accounting software and pay your vendors with ease
- Redeem your miles on flights, hotels and more. Plus, transfer your miles to any of the 15+ travel loyalty programs
- Every year, you'll get 10,000 bonus miles after your account anniversary date. Plus, receive an annual $300 credit for bookings made through Capital One Business Travel
- Receive up to a $120 credit for Global Entry or TSA PreCheck®. Enjoy access to 1,300+ airport lounges worldwide, including Capital One Lounge locations and Priority Pass™ lounges, after enrollment
- Enjoy a $100 experience credit and other premium benefits with every hotel and vacation rental booked from the Premier Collection
- This is a pay-in-full card, so your balance is due in full every month