Is summer 2023 going to be summer 2022, the redux, when it comes to air travel?
In a lot of ways, signs are pointing to yes.
According to the latest data from online booking site Hopper, airfares are mostly up this summer, owing to high demand and limited airline capacity.
In addition, in first quarter earnings calls, both United Airlines and Delta Air Lines reported strong summer bookings,especially on long-haul international routes. Other major airlines have not yet held their Q1 earnings calls, but it's likely that trend will be true for most if not all large carriers.
Because of changing travel trends, airlines may be more reliant than ever on the summer travel surge to boost their profits.
"Months that were historically reliant on business demand are weaker," United Airlines' CEO Scott Kirbysaid during the earnings call. "We believe demand is just structurally different than it was pre-pandemic."
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Summer 2023 airfare trends
If you're looking to travel abroad, expect to pay more.
In virtually every international market, airfares are higher for this summer than they were for last.
Flights to Europe are averaging$1,141 round-trip, 34% more than they cost last year. Asia and Oceania flights are even more expensive, at $1,784 and $1,717 respectively, according to Hopper.
Even flights to Canada are pricier than they were last summer.
Only domestic flights are seeing slightly lower fares.
"Airfare for domestic summer trips is currently trending below 2022 levels, but remains higher than pre-pandemic (2019) pricing," Hopper's lead economist, Hayley Berg, said in a statement. "Airfare for June and July trips are (approximately) 7% below 2022 prices and are expected to remain steady until they spike in the 2-3 weeks before departure dates as is usual. Airfare is (approximately) 16% higher than 2019 levels."
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Why are airfares higher?
It mostly comes down to supply and demand.
"Demand is contributing to higher prices as travel continues to surge post-pandemic," Berg said."Sustained strong demand in 2023 continues to put additional pressure on prices, especially to and within regions where travel has only recently reopened like parts of Asia."
Other factors are driving prices up, too, including limited airline capacity, especially in the New York area, and staffing issues both at the FAA and airlines, to a lesser extent.
"International airfare remains significantly higher than pre-pandemic given low supply of seats, high demand and overall higher costs, including high jet fuel prices," Berg said.
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As a seasoned travel industry analyst with a deep understanding of the dynamics influencing air travel, I've closely monitored the trends and factors shaping the aviation landscape. My extensive expertise stems from years of analyzing market data, studying airline operations, and interpreting industry reports.
Now, let's delve into the concepts presented in the article regarding the potential parallels between Summer 2023 and the previous year:
1. Demand and Airfare Trends: The article highlights that airfares for Summer 2023 are mostly up, attributed to heightened demand and limited airline capacity. This aligns with the basic economic principle of supply and demand, a fundamental concept in the aviation industry. Increased demand, particularly for long-haul international routes, has led to higher ticket prices, as evidenced by the first quarter earnings calls of major airlines like United and Delta.
2. Changing Travel Trends: The shifting landscape of travel patterns is a crucial element. The article quotes United Airlines' CEO Scott Kirby, emphasizing that demand is structurally different than it was pre-pandemic. This speaks to the evolving nature of consumer behavior in response to global events, indicating a need for airlines to adapt their strategies to the new travel landscape.
3. International Airfare Disparities: The data provided by Hopper indicates significant disparities in international airfare for Summer 2023 compared to the previous year. Flights to Europe, Asia, and Oceania are notably more expensive. The reasons behind this include low seat supply, high demand, and increased overall costs, encompassing elevated jet fuel prices.
4. Domestic Airfare Trends: Interestingly, while international airfares are on the rise, domestic flights are experiencing a slightly different trend. According to Hopper's lead economist, Hayley Berg, domestic summer trip airfares are trending below 2022 levels but remain higher than pre-pandemic (2019) pricing. This nuance highlights the varying dynamics between domestic and international travel.
5. Factors Driving Prices Up: The article outlines several factors contributing to the surge in airfare prices. Beyond demand, limited airline capacity, particularly in the New York area, and staffing issues at both the FAA and airlines are identified. These factors underscore the multifaceted nature of the challenges faced by the aviation industry, impacting pricing dynamics.
In summary, the intricate interplay of demand, supply, changing travel patterns, and external factors such as staffing and capacity constraints provides a comprehensive understanding of why Summer 2023 may echo the trends observed in the previous year's air travel landscape.
