If you haven’t booked a summer trip yet, actually putting off this year might have a bit of a benefit. You may be able to see the airfares falling continuously.
As we head into busy summer travel months, almost all US airlines have shown investors during their latest corporate revenue season that the industry has entered a period of uncertainty due to changes in the economic situation, and there may be less demand than expected this year.
Afar spoke to four experts in the aviation and travel industry to try to predict the impact of this soft demand on the price of their next plane ticket. Bad news for airlines may be good news for travelers looking to book upcoming flights.
The sign points to lower airfares in 2025
What causes this uncertainty? As is common when the economy is active, it’s multiple things.
“Softer demand from business and government travel, a decline in inbound international tourists from certain regions, and uncertainty over the economic outlook has led airlines to readjust their outlook for the remainder of the year.” “It’s a yellow flag that even (airports) aren’t too confident about what will happen next. And because of all these factors, all the signs seem to point to yet another dip in the average airfare.”
In fact, in March, United’s first quarter revenue report revealed that government-related travel had dropped by up to 50% for airlines following administrative cost-cutting measures, Reuters reported.
Given all the current economic situation, Henry Harteverd, an aviation analyst and president of the Conference Research Group, agreed to Nastro that airfares are being prepared to drop.
“I think airfares are probably more modest than they were a year ago,” he told Afar, saying oil prices have also fallen, which usually leads to lower jet fuel prices, and that airlines will provide “more financial leeways” to lower prices.
John Grant, chief analyst at Aviation Data Analytics company OAG, throws numbers at his forecast, predicting in the distance that “it will fall 3-5% during peak peak this summer,” and expects a “slightly deeper drop in the last quarter of the year, perhaps 5-7%.”
They all said it was notoriously difficult to try to predict airfare pricing, but Harteverd and Nastro agreed that if they “exactly” knowing that Grant is a “wealthy man,” Experi likely would fall in prices rather than increase in months.
There’s no need to wait for airfares to drop – some already have one
In fact, airfares have already fallen somewhat compared to last year, according to the latest figures from the U.S. Bureau of Labor Statistics. After a 4% drop in February, airfares fell again in March, down 5.3% from a year ago.
Harteveldt anecdotes, he recently noticed “aerial fare at a really attractive price” like Southwest Airlines’ sales at fares starting at $39 instead of the usual $49.
Despite the decline in inbound international tourists, international fares are generally stable, compared to domestic prices, thanks to still strong dollars that encourage Americans to take European holidays. But there are discounts there too, Nastro discovered.
“Take NYC to Dublin, the peak slot at the end of July, with just $412 round trip,” she said. “This type of flight costs more than $800 round trips in peak months like July, but they are still available on some (peak) dates.”
Airlines try to raise prices even in uncertain times
Like other businesses, airlines don’t want to lower prices even if demand remains an open issue.
“Through these extremely sophisticated pricing and revenue management software systems that airlines have become experts in keeping fares with consumers’ willingness to pay,” Harteveldt said. “It’s like Las Vegas. Homes always win.”
If airlines can continue to optimize their planes, schedules and routes further, they could survive this period while keeping airfares where they existed, full of planes and more profitable flights. Both Delta and United have said they are reducing capacity this year to reduce weaker demand and growth opportunities than expected. Airlines may make more changes throughout the year in response to further demand changes. Lower fares can be temporary as the industry adapts to evolving economic, financial and travel landscapes.
There is also a human element. People like to go on vacation. Travel isn’t about food costs or mortgage payments, but U.S. households usually “prioritize travel savings” in their budget, Hartveldt said, citing industry research.
Haleyberg, lead economist at travel booking site Hopper, agreed.
“When consumers faced (economic) headwinds in past periods, such as the 2008-2011 recession and the post-pandemic recovery period, they have consistently protected their travel spending to their best capabilities,” she said.
Is there an ideal time to book a flight in your current environment?
Don’t wait to take advantage of reduced airfares. If you see a good looking deal, book it, Harteveldt said.
“When it comes to booking flights, if you find a flight that meets your schedule, budget or other criteria, go ahead and book,” he said. “Don’t try to cover up the airline.”
