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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