You might have noticed that flights are more expensive this holiday season, and for much of the next year: five times as expensive, in some cases. The general consumer price index inflation has been a major problem over the past twelve months, but shockingly airfare has seen inflation levels five times higher than the national average. In fact, the year-over-year inflation rate of 42.9% is a record high.
Airlines are struggling with demand because of inflation, delays and overloaded airports
According to the laws of supply and demand, as demand increases in comparison to supply, prices will rise. Basic economics says that this is what’s happening now, largely because of a global pandemic. Throughout most of the year, travel has been a low priority for many people due to the one constant tragedy that has overtaken it. That’s all changing now, though — demand is skyrocketing thanks in part to an increased need to escape from reality. Airlines are seeing such a surge in business travel right now that it actually accounts for a major money maker for them. With huge spikes in demand like this in November and December, airlines are struggling with capacity during peak travel seasons. There have been so many COVID-related obstacles lately – from too few pilots to fewer maintenance workers – that airlines aren’t able to fly as many planes or as many routes… and they’re ultimately paying the consequences. American Airlines has already had to scale back capacity on some regional shorter routes, driving prices up significantly in these smaller markets.
Fuel prices are at an all-time high, but prices are expected to fall soon
The price of airfare is affected by other goods too. That’s because the fuel supply has been dwindling due to the Russian war in Ukraine, which has made it more expensive to fly. Fuel prices have gone down a little bit ever since going up, but they’re still high at well over $70 per barrel. This is one of the most important contributors to airfare prices and as long as they stay high, airfares will likely stay high as well.
Airlines are guilty of price gouging
Airlines are undoubtedly guilty of raising prices on passengers just so they can make more profit. Over the past few months, demand has only gone up, and airlines have responded by increasing their prices in order to capitalize on this rise in travel demand. With many people starting to take trips again now that the pandemic is over, price doesn’t always have a huge determining factor on their decision to fly. Delta’s recent earnings report revealed record earnings largely thanks to highly inflated ticket prices.
What Happens to Prices When the Panic Is Over?
It’s hard to predict whether expensive flights will continue to be the norm. The good thing is that when airlines return to their full staffing and capacity, some really expensive flight pairs may see their average prices decrease. However, this won’t happen until at least next summer- in October of 2023. Delta Air Lines has said they expect a return to pre-pandemic service levels around the summer season of 2023.