The US consumer price index (CPI) showed a decline of 8.1% for airfares, despite summer travel hotting up—one sign that inflation is declining faster than economists expected.
June also marks the third month in a row that airlines fares fell, according to new data from the Labor Department. April and May witnessed a cumulative decline of 5.6% in airfares. Over the last 12 months, airline ticket prices have fallen by 18.9%.
Travel demand spiked last year, in the immediate wake of the pandemic. At one point in 2022, airfares were registerng double digit growth in CPI data. But as that initial burst of “revenge travel” energy subsides, travel and prices in the aviation sector are normalizing.
Will airline tickets continue to get cheaper?
Private research on airfares backs up the government data. Hopper, a travel booking app and agency, analyzed the prices of flights around July 4, 2023, and compared them to the same time last year. The average price of a domestic round-trip flight had fallen by 27%, back to $300 and in line with what airlines were charging during the same holiday in 2019.
Airline commentators have also noted, in recent months, that consumers are able to find round-trip flights for under $100 again.
The decline in airfares bodes well for other costs that come with traveling. Hopper’s analysis showed that the cost of car rentals had fallen by 25% between July 4 last year and this year. In the CPI report, fares for rental cars and trucks have been falling for five consecutive months and are down by 12.4% year-on-year.
Hotel costs also fell in June, declining by 2.3%. But hotel prices haven’t been as cooperative and are still 5% above their levels compared to this time last year.
International flights are still expensive
Airfares for international travel haven’t been as accommodating, according to Hopper. They’re still 33% above what they were in 2019.
In June, the Airports Council International Asia-Pacific accused airlines of hurting demand by gouging prices, even though airports have kept their prices steady. ACI Asia-Pacific studied the 36,000 routes in the Asia-Pacific markets and found that international prices had been raised five times as much as domestic prices.