Airfares are finally starting to cool as peak summer travel season fades. Now what?

Flights, believe it or not, are getting cheaper. Airfares fell a seasonally-adjusted 1.8% from May to June, according to the latest US inflation data, published last week. Fares were one of the few categories to decline at a time when consumer prices rose at the fastest clip in more than four decades. The surge in spring and summer travel — even at sky-high prices — has been a boon to airlines, driving revenue above 2019 levels even as airlines fly less than they did before the pandemic, according to recent reports from major carriers like Delta and American Airlines. Now the question is: How resilient will demand be after the summer peak as carriers and travelers alike grapple with persistent inflation and worries about an economic slowdown? CEOs from Delta to JPMorgan last week said consumers continue to spend voraciously on travel. But rising costs can affect household vacation budgets and companies’ appetite to send employees out on business trips. A jump in costs is already weighing on airlines’ bottom lines and high fares are forcing some travelers to change their plans. Ticket prices often dip when the peak summer travel season fades — children return to school and families wrap up vacations, though business travel often ramps back up. Airlines also adjust capacity for lower-demand periods so they aren’t flooding the market with seats they would need to offer at low fares to fill. US roundtrip flights as of July 14 averaged $375, down from a May peak of $413 but still up 13% from 2019, according to fare-tracker Hopper. Airlines have nonetheless been upbeat about future sales, citing the pent-up desire to travel from both businesses and leisure travelers.<br/>