This summer, it's possible that you'll pay more than you expected for an inexpensive plane ticket.
According to a recent forecast by the price-predicting and travel booking app Hopper, economy airfares will rise sharply during the first half of this year, exceeding normal seasonal upticks significantly as travel rebounds from the omicron wave of the pandemic.
Still, main cabin ticket prices could be held down by growing competition from ultralow-cost carriers, with premium seats remaining discounted due to the continued dearth of business travelers.
"I don't really expect to see a recovery in business fares until the second half of the year," said George Ferguson, senior aerospace and airlines analyst for Bloomberg Intelligence.
According to ARC, average roundtrip domestic airfares reached 96% of the 2019 level in December, their closest approach since the onset of the pandemic. But fares had plummeted by early this month, according to Hopper, a plunge likely due to the fast-moving omicron.
Budget roundtrip domestic fare quotes for the first nine days of January averaged $236, 19% less than January 2019, and were down 16% month over month. Hopper defines budget fares as those that are lower than 90% of the fare quotes it tracks.
Budget international roundtrip airfare averaged $643, down 14% from January 2019 and down 15% month over month.
However, similar to the dynamic that drove a price recovery last spring after vaccines rolled out, Hopper expects that surging demand beginning next month as omicron fades, coupled with normal seasonal demand jumps around spring break and the summer, will push airfares up by 7% month over month through June.
The largest jump, forecast at 11%, will come in March, according to the forecast by Hopper senior analyst Adit Damodaran. And by May, budget domestic airfares will average $315, just 3% less than 2019 and 16% more than last year.
High jet fuel prices, which currently are at their most expensive level since 2014, will also be tinder for higher ticket prices, Damodaran said.
Hopper expects a similar trend for international airfares, with bargain airfares rising by an average of 5% per month through June and the biggest bump coming in February. The average bargain price in June will be $831, 7% below the 2019 level, Hopper predicts.
Still, even if the Hopper forecasts hold, there will be plenty of opportunities to find inexpensive fares, said Scott Keyes, owner of Scott's Cheap Flights, a service that alerts members when bargains pop up at their local airports.
"You can't book average airfare. You can only book available fares. And airfare is incredibly volatile," Keyes said.
He explained that as airlines have shifted their business models in recent years to draw higher portions of their revenue from premium seats, ancillary products, co-branded credit cards and cargo, their dependence on economy seat revenues has declined. This dynamic, combined with growing competition from discount carriers, often results in outstanding deal opportunities.
Keyes said that in recent months, airfares to Hawaii have been especially affordable, with roundtrip tickets from the East Coast often available for around $300. Looking ahead, he expects some exceptional prices on European routes as carriers add more transatlantic flights this spring in anticipation of a surge in demand.
Capacity and competition rising
In the meantime, not everyone is certain that economy ticket prices will bounce over the spring at the pace forecasted by Hopper. Ferguson concedes that monthly increases of 7% are possible, especially in March and April, coming from today's low price points. But he also said that surging capacity among discount airlines, coupled with low business demand, will likely keep prices down.
He noted, for example, that according to data from Cirium, Spirit is scheduled to take delivery of 31 aircraft this year and Frontier is scheduled to take delivery of 20. Southwest, meanwhile, expects to take delivery of 114 planes. And while some of those aircraft will replace retiring planes, most will add to capacity.
Ferguson also said that until business travel makes a more substantial recovery, the full-service carriers will continue loading up on flying to popular leisure markets like Florida, placing them more frequently in competition with ultralow-cost rivals Spirit, Frontier and Allegiant.
"It is going to keep fare prices down for a while," he said. "They're all trying to fly to the same places. It makes it very hard."
The recovery lag by business flyers in comparison to leisure travelers also means that even if economy fares approach 2019 levels by May, premium seat prices won't necessarily follow.
According to Damodaran, business-class transoceanic fares averaged six times the price of economy seats in December 2019. But with ARC data showing that corporate travel was still less than half of the 2019 level, that multiple dropped to just triple this past December.
Damodaran demurred from predicting when business travel will recover, but he said "that's the only thing I can see improving the multiple on business fares."