Airfares edge down

Airfares took off this summer, as domestic travelers returned to the skies in force. The Consumer Price Index, a monthly measure of the change in average prices paid for consumer goods, showed airline fares rose 7% between April and May, after a nearly 3% increase in June. They stabilized, down 0.1% , in July.

But as travelers consider the threat of the delta variant, many are canceling their plans. Southwest Airlines, in a recent regulatory filing, said leisure traffic and fares were above July 2019 levels, but downshifted its outlook for third quarter profitability, stating, “The Company has recently experienced a deceleration in close-in bookings and an increase in close-in trip cancellations in August 2021, which are believed to be driven by the recent rise in COVID-19 cases associated with the delta variant.”

While many had predicted a comeback for business travel in fall, coronavirus variants may stall that recovery, putting more downward pressure on airfares. United Airlines, for instance, plans to operate 26% fewer flights in the third quarter compared to the same period in 2019.

In keeping with pre-pandemic patterns, the booking app Hopper is predicting that fall leisure airfares will ease back as leisure travelers figure out how to vacation with the virus. It expects a 10% drop in domestic airfares in the fall, a figure in line with 2018 and 2019 patterns, and forecasts the average domestic roundtrip ticket at $260, compared to $288 this summer.