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Thursday, December 7, 2023

Flight Prices Take Off As U.S. Air Travel Nears Pre-Pandemic Levels

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As airlines prepare for a busy holiday season, airfares are gaining altitude and rising to pre-pandemic levels, according to Adobe’s Digital Economy Index, an encouraging sign for the beleaguered industry amid soaring demand from American holidaymakers. 

Key Facts

Domestic flight prices in October were just 7% below 2019 levels before the pandemic, according to Adobe, which tracks transactions from six of the top ten U.S. airlines.

Costs are up from flight prices in August and September, which were respectively 11% and 13% below levels in 2019.

Despite increasing demand—bookings in September and October were just 13% and 10% below the same period in 2019—lower ticket prices kept revenues grounded, Adobe found, driving $4.2 billion in online spending in September and $4.8 billion in October, down 35% and 28% from the same period in 2019, respectively.

The lower airfares were in part due to heavier discounting by airlines, according to Adobe, and prices had dropped significantly as the delta coronavirus variant tore across the country.

The busy holiday period is also driving up prices online, according to Adobe Digital Insights lead analyst Vivek Pandya, who said consumers would be wise to “start thinking about Christmas travel pretty soon.” 

Bookings for Thanksgiving flights this year, defined as landing between November 20 and November 25, are on track to meet or beat pre-pandemic levels, according to Adobe, and are up 78% from this point in 2020 and 3.2% above 2019 (by November 7, the majority of Thanksgiving tickets are usually booked). 

Key Background

After advising Americans to stay at home for the holidays in 2020, public health officials like Dr. Anthony Fauci have given the go-ahead for people to “enjoy the holidays” with family and friends. Data from Adobe, in addition to projections from AAA, indicate many Americans have taken this to heart, with the overall number of travelers by car or plane expected to be just below pre-pandemic levels. Resurgent holiday travel follows a broader recovery for the industry, with newly reopened international travel buoying domestic gains. Overall, the sector was one of the worst hit during the pandemic and the United Nations estimates the crash could cost the global economy more than $4 trillion in 2020 and 2021. 

What To Watch For

Rising jet fuel prices could drive airfares even higher, according to industry executives. 

Big Number

53.4 million. That’s how many Americans will likely travel between Wednesday, November 24 and Sunday, November 28, according to AAA. The forecast is up from the 47.1 million traveling over the Thanksgiving holiday last year and just 5% shy of the number of travelers in 2019. 

Further Reading

Thanksgiving Travel Expected To Be Nearly As Busy As Pre-Pandemic, AAA Predicts (Forbes)

United Airlines CEO says to expect higher fares as jet fuel prices rise, takes swipe at rivals’ strategies (CNBC)

U.S. Drops Travel Ban As Covid Cases Surge Across Europe (Forbes)

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