Rising fares, low-cost airlines: Navigating the new reality in the sky
By Elaine Glusac
Leisure travel is back after the omicron wave, with travel off only about 8% last weekend compared with the same period in 2019, according to the Transportation Security Administration’s checkpoint numbers.
As travelers make their plans for upcoming spring and summer travel, they can expect to see airfares inching up — pushed by seasonal demand, inflation and oil price spikes — while new routes are expanding as both American and foreign airlines aim to encourage a return to international travel.
The rush to travel has inspired innovation in the skies at the same time as the airline industry encounters new headwinds with the war in Ukraine. Here’s how the following developments in the air may affect your next trip.
Airfares on the rise
One sign of travel’s recovery is higher airfares, as airlines are able to charge more to growing numbers of willing flyers. According to the Consumer Price Index, airfares were up more than 12% in February compared with the same period in 2021, when COVID-19 vaccines were just being introduced.
At this point, those fares are more a reflection of competition for seats than the rising price of jet fuel since Russia’s invasion of Ukraine. On Feb. 24, jet fuel was $2.71 a gallon, according to the Argus U.S. Jet Fuel Index, peaking around $4.11 in early March. It is currently around $4.
Fuel accounts for about 30% of an airline’s operating cost, said Adit Damodaran, the economist at the flight-booking app Hopper, adding that a 10% rise in jet fuel normally triggers about a 3% increase in expenses, which are generally passed on in higher airfares. According to Hopper searches, the average domestic airfare is $330, about 7% above 2019 prices.
American carriers have not instituted fuel surcharges, although Delta Air Lines’ president, Glen Hauenstein, recently said fare hikes could be coming in the second quarter thanks to strong demand.
For now, most fare increases are tied to the post-omicron boom in travel.
“Travel will likely cost more this spring and summer from pent-up demand,” said Steve Hafner, the chief executive of Kayak, the travel search site, noting that flight fares are up 21% for domestic travel over spring break compared with 2019. The most popular destinations are Las Vegas, Orlando, Miami, Los Angeles and Phoenix. “There are still deals to be found, but people should plan their trips soon to get them.”
For summer travel, Kayak searches found that prices are up 28% compared with 2019 fares for domestic travel, and 6% for international.
“The fact that airfares are going up does not negate the fact that we are awash in cheap flights,” said Scott Keyes, the founder of Scott’s Cheap Flights, a membership service that finds bargain flights. He added that fares began steadily declining in 2015, with increased competition from low-cost carriers and a shift by airlines to raise ancillary fees, sell frequent flyer miles to credit cards, and charge more for business and first-class seats, allowing them to keep economy fares low.
While rate swings can happen daily, standard bargain-hunting advice applies, including buying tickets between one and three months in advance, traveling in the offseason, flying at off-peak times and being flexible with your dates and airports.
More international options
Well before Russia attacked Ukraine, America’s legacy airlines decided 2022 was their comeback year for flying internationally. With travel restrictions still tight across much of Asia, most of the airlines that fly internationally from the United States focused on Europe. So far, they are sticking to their resolve.
“Airlines are really anticipating a big summer for travel, especially iconic European vacations, and are adding capacity now,” Keyes said, noting that there is a 25% increase in available seats on flights to London from the United States this summer compared with the pre-pandemic summer of 2019.
United Airlines is leading the pack with what it says is its largest trans-Atlantic expansion ever, adding five new destinations, including Bergen, Norway; the Azores Islands; Amman, Jordan; Palma de Mallorca, Spain; and Tenerife in Spain’s Canary Islands. By summer, it plans to add new flights to Berlin, Dublin, Milan, Munich and Rome, and restart seven routes suspended during the pandemic, including service to Frankfurt, Germany; Nice, France; and Zurich.
Delta Air Lines plans to operate nearly twice the number of trans-Atlantic flights this summer compared with last. New routes from Boston will reach Athens, Greece, and Tel Aviv, Israel.
Collectively, U.S. airlines will be operating more than 70 routes to Europe not offered in 2019, according to Air Service One, a company that tracks route development.
Considering the war in Ukraine, travelers planning flights to Europe should ensure they are buying tickets with no change fees, allowing them to get a voucher for a future trip should they want to postpone, which most airlines have been offering since the pandemic began.
Low-cost options grow
American carriers aren’t the only ones vying for your business. A growing number of low-cost carriers — including foreign entries — are offering new routes, new competition and bargain fares.
Most analysts think the economics of trans-Atlantic travel preclude budget carriers from succeeding on the routes, pointing to Norwegian Air Shuttle, which stopped flying trans-Atlantic routes during the pandemic, and Iceland’s Wow Air, which went bankrupt in 2019.
Caveat emptor.
Nonetheless, the Iceland-based newcomer Play picks up where the defunct Wow left off, offering service to more than 20 European destinations with a stop in Reykjavik on the way. By summer, it plans to operate from Boston, Baltimore and New York Stewart International Airport in the Hudson Valley. In September, it plans to expand to Orlando.
Recently, its rate calendar showed one-way segments from New York to Dublin with a stop in Reykjavik from about $153. Expect lots of extra fees, including charges of $4 to $40 for a seat, $32 to $53 for a checked bag and in-flight food and beverage from 1 euro for water to 9 euros (or about $1.10 to $9.90) for a ham-and-cheese baguette.
“If you’re going to Iceland or looking for a cheap way to get to Europe, and you don’t care about service, that’s the way to do it,” said Brett Snyder, the founder of Cranky Flier, an aviation blog, and Cranky Concierge, a travel planning service.
Canadian ultra-low-cost carriers Swoop and Flair Airlines are also expanding at American airports.
Owned by West Jet, Canada’s second largest airline, Swoop will start service this summer to Chicago; Los Angeles; Nashville, Tennessee; New York; and San Francisco, mainly from Toronto and Edmonton, bringing its number of U.S. destinations to 11. One-way fares start at 99 Canadian dollars (about $79), before fees.
Based in Edmonton, Flair added 17 new cross-border routes in December, reaching six U.S. destinations, including Las Vegas, Palm Springs, Phoenix and Orlando from airports in Montreal, Vancouver and others. Fares in April between New York’s Kennedy International Airport and Toronto recently started around CA$100 one way, with fees starting at CA$29 for a carry-on bag, CA$10 for a seat and CA$29 to make a penalty-free change to a ticket.
“Flair is the first ultra-low-cost carrier from Canada that’s been able to build momentum,” Snyder said.
These airlines share the drawbacks of other ultra-low-cost carriers — principally, that they fly less often, making them prone to significant passenger delays when there are weather or mechanical problems, because the next flight may be days away and they lack agreements with larger airlines to accept stranded passengers.