Nearly everything is more expensive than it was a year ago, and things weren’t exactly cheap a year ago.
From purchasing a tank of gas to a Disney vacation to a night out, inflation is driving the cost of everything upwards. The only thing that is getting cheaper at all these days is the cost of a streaming service, but now you have to sit through a bunch more ads for that.
The reasons for this are varied, but they all basically go back to covid-induced supply chain issues, and the difficulties in getting both labor and raw materials back to pre-pandemic levels. Russia's war on Ukraine has intensified the situation.
That said, inflation hasn’t affected all sectors of the economy equally, and a new survey highlights just how much the price of one particular consumer service has risen.
The Cost Of Flights Has Risen In Surprising Ways
It’s not a surprise that air travel costs more these days, as the airline industry has been hit particularly hard by covid-induced labor shortages, and has struggled to replace the pilots who either retired early or took a buyout during the pandemic. Plus, the price of jet fuel increased by approximately 90 percent this year alone. It costs on average 120 percent more than it did in 2021, according to research from the firm McKinsey.
But that being said, a new survey from Skytra, an Airbus subsidiary that compiles daily air travel price indices, reveals that airfare costs have risen in surprising ways, as noted by Travel Weekly.
The survey found that economy fares on U.S. and Canadian flights are up 5% from 2019. By comparison, prices for premium cabin flights are up 36%.
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Many Factors Are at Play in Price
So why exactly is the price of an average premium fare up so much greater than that of an economy fare?
There’s a few different things in play here. For one, airlines say that the demand for premium is surging due to growth of business and leisure hybrid trips.
The post-pandemic era has also led to a surge in the popularity of high-end leisure travel, as there are plenty of people that aren’t traveling for business (which is to say, people who tend to fly a lot or have their flights paid for) or not just business, who are willing to pay extra for a nicer flight. Delta (DAL) recently reported that premium demand outpaced demand for the main cabin by 10 percentage points in the third quarter.
“We believe that through the pandemic we've created kind of a new class of customer, which is the high-end consumer that wants these products that maybe didn't have as much access to them because they were given to the business customer earlier in the booking process," said Delta president Glen Hauenstein during the company's October earnings call.
“So I think the big epiphany for us was there's a much broader demand for this than just business travelers.”
The thinking here, of course, is that if there is more demand for a good (in this case premium passenger seats), with a limited, fixed supply, then prices will naturally go up.
But just as consumers don’t have much of a choice other than to suck it up when it comes to inflation, there will always be people who will pay more for a nicer service. These days, that includes a lot more fliers. But is there a tipping point where the premium price gets to be too much? Perhaps next year will tell us.
