The COVID-19 era of cheap flights is swiftly coming to an end and travel firms are seeing signs that airfares will likely reach 2019 pre-pandemic levels as soon as April.
With the wost of the omicron variant waning across the country, airlines struggling to ramp up flight schedules are set to clash with pent-up demand from travelers ready to get back into the skies and explore the world.
Airfares for travel booked in January were still about 18% below pre-pandemic levels, according to travel booking firm Hopper.com. But those prices are increasing quickly, as much as 7% a month and price hikes on airfares won’t likely stop until schools get out for summer. That could bring the price of the average roundtrip ticket up to $315 by June, 33% higher than today’s prices, according to Hopper economist Adit Damodaran.
Carriers including Fort Worth-based American Airlines and Dallas-based Southwest have been slashing schedules to keep up with their own pandemic realities. Airlines desperately need more pilots to fly planes and each needs thousands more employees to get operations back to pre-pandemic operation levels and avoid the passenger enraging meltdowns that plagued them last summer.
Meanwhile, travel agents say they are busier than at any point in the last two years. While customers are price-sensitive, they are also eager to explore after two years of road trips to socially-distanced domestic locations.
“Everything is more expensive, even for kids wanting to backpack through Europe,” said Jenny Westermann, a travel agent with Sanders Travel Centre in Fort Worth. “It’s not just plane tickets and hotels, it’s museums and trains, too.”
“Once travelers realize that everything is going to cost more, they are accepting the increases,” she said.
Round-trip airfare for flights out of DFW International Airport dropped to as low as $264 during the summer of 2020 as airlines slashed flights and many of the world’s most popular destinations were closed to travelers because of COVID-19. A year later, average airfare was back to $313, but well below the $403 average before the pandemic, according to the Bureau of Transportation Statistics.
The last few months have been a whipsaw for airlines and travel firms, which have watched travel demand ebb and flow with COVID-19 variants and brief periods of travel optimism.
“A lot of travelers feel like we are in the endemic stage where they know this is something they are going to have to deal with for years,” Westermann said. “And Texans have always been more likely to travel than people in other parts of the country.”
Demand isn’t the only reason that airfares are rising. Airlines are seeing cost increases as labor and jet fuel get more expensive. A gallon of jet fuel is selling for more than $2.50 a gallon, the highest rate in more than six years, according to the Argus Daily Jet Fuel Index. That’s about 30% higher than a year ago.
Fuel and labor combine for about half the costs of a commercial airplane ticket, according to Airlines 4 America, the trade group of major U.S. airlines.
Fuel prices are rising for aircraft just like the price increases automobile drivers are experiencing. The global economy is growing quickly as businesses tool up after the pandemic, people are returning to work and oil producers are scrambling to drill for more oil after pandemic slowdowns. U.S. tensions with Russia are keeping oil prices high too.
On top of that, oil prices tend to rise quickly in spring in the United States as refineries switch from winter heating fuel back to automotive petroleum. Oil and gas prices tend to rise the most in February, but don’t usually peak until just before Labor Day.
Airlines are also facing increasing employee costs and other struggles to keep fully staffed.
Southwest Airlines said it would raise its minimum pay to $17 an hour after raising starting salaries from $13 to $15 last June.
“We just need to get the staffing levels to the point where we can operate our aircraft, operate them reliably, produce the kind of operational performance that our customers need and want and deserve, and it’s just going to take staffing to do that,” Southwest’s new CEO Bob Jordan said during the company’s earnings call last week. “Which is why you saw us raise our starting wages.”
Even with higher wages, airlines are struggling to get enough employees to fly the schedules they planned in 2022 as they anticipated demand returning next year.
American Airlines recently cut about 20% of its schedule for March and will likely make cuts for April and May soon. Southwest Airlines is in the process of cutting flights in April and May, after hopes that it could fly as many flights in 2022 as they did in 2019. Now Southwest leaders expect capacity to be down about 4% this year compared to 2019, with those cuts mostly coming in the spring.
During the peak of the omicron surge, Southwest had 5,000 of its 54,000 employees out with COVID-19. Chief Financial Officer Tammy Romo said the company’s employees faced the same struggles as others around the country with COVID-19 cases forcing parents to call in sick as schools and day care centers closed.
Those pressures aren’t slowing travelers, who want tickets to travel around the U.S. and abroad.
Some 81.5% of travelers say they are in a “ready-to-travel state-of-mind,” according to industry research firm Destination Analysts. That’s the highest level since the COVID-19 pandemic began and travel optimism is hitting the same levels it did during the all-too-brief delta variant recovery in the fall.
“Travel for February was soft and most of the travel we are seeing is for close-in trips,” said Misty Belles, spokeswoman for travel agent network Virtuoso. “Now we are seeing people actually planning again, planning for spring break and planning for summer.“
Still, airline and travel experts say consumers are recovering quicker with each COVID-19 surge. The initial COVID-19 wave set airlines back by a year, the delta variant by a few months and the omicron variant by a few weeks.
“As we have seen throughout the pandemic, each new variant and corresponding increasing cases is followed by a faster recovery of demand with fewer regulatory restrictions and changes in travel policies,” American Airlines’ incoming CEO Robert Isom said on Jan. 20.
That means the golden period for cheap flights is also shorter.
There are still deals to be found for travelers, but 2022 won’t be anything like it was in 2020 and 2021 when tickets hit rock-bottom prices. People looking for extraordinary deals will have to be flexible on both location and their willingness to get on a plane right away, said Scott Keyes, founder of Scott’s Cheap Flights.
For instance, ticket prices for February travel are still low. February is traditionally a slow month before the weather warms and the spring break rush begins with students getting out of school.
Southwest and American are each selling flights to New York’s LaGuardia for less than $60 each way from the Dallas area in February. Tickets to Cabo San Lucas and Puerto Vallarta can be found for less than $200 round-trip, Keyes said. There are even trips to Barcelona for around $450 in the spring.
“As we’ve seen during other times in the pandemic, you can get great deals if you are flexible,” Keyes said. “If you are paying attention and willing to get on a flight this weekend, you can get some great prices. Not everyone can do that though.”
