Fuel, one of the airlines’ two largest operating expenses, is 40 percent cheaper than it was a year ago. And airline profits are robust, in some cases at record-high levels.
Against that backdrop, flyers might reasonably expect the airlines to cut airfares. The airlines, however, have other ideas.
According to Rick Seany, at FareCompare, U.S. airlines have attempted to raise fares no fewer than five times in 2016, the same number of attempts made during the entire 2015 calendar year.
With the latest increase, from late last week, Seany says that average roundtrip fares have been bumped by around $22 so far this year. “And yes, they will try again,” he warns.
How have the airlines managed to raise prices when academic economic models would suggest that price decreases are in order? There are two mitigating factors, working in combination: diminished competition and robust consumer demand. As long as those two elements remain in place, it will remain a sellers’ market.
The good news, according to Seany, is that the latest price hikes mostly affect business travelers and others traveling on walk-up fares, and those traveling on less competitive routes.
Of course, if demand remains strong, flyers on other routes can expect to pay more as well.
Reader Reality Check
Do you feel you’re getting good value for your airfare dollar?
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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.
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