Domestic flyers are likely to pay higher airfares during the first half of this year than they did in 2024. But deal-seekers might have better luck on long-haul travel.
Consumer Price Index data released on Jan. 15 showed that airfares in December were up 7.9% year over year, having jumped 3.2% between November and December, adjusted for normal seasonal price trends.
For fares sold through travel agency channels, December's average roundtrip, domestic ticket price was $561, up 4% from the previous year, according to ARC.
Meanwhile, Hopper predicts that discount hunters will encounter significantly elevated domestic ticket prices throughout the first half of 2025. This month, Good Deal airfares (defined by Hopper as fares that are lower than 90% of the fare quotes it tracks) are 12% higher than they were in January 2024, according to an analysis by the app's lead economist, Hayley Berg. Hopper projects prices will be 19% higher in May and 12% higher in June.
In an interview, Berg emphasized that the increases aren't as bad as they sound since ticket prices were deflated during the first half of last year due to airline overcapacity. Compared with 2023, she said, prices are only up about 4%.
Driving this year's anticipated higher prices are a combination of ongoing consumer demand and a drop-off in U.S. airline capacity growth, including capacity cuts in the discount sector.
A survey fielded by Hopper in November found that 76% of Americans plan to spend as much or more on travel this year than they did last year. Meanwhile, domestic capacity this month is up just 0.7% from January 2024, according to an early January Deutsche Bank analysis. That includes a 4.7% capacity reduction from discount airlines, caused mostly by cuts at Southwest, Spirit and JetBlue. Year-over-year domestic growth is slated to rise to 4.7% by June, as airlines ramp up for the busy flying season, but growth among discounters is still scheduled to be less than 1% at that time.
Aircraft delivery delays at Boeing and ongoing Pratt & Whitney engine inspections impacting Airbus planes factor into the modest capacity growth. But in the low-cost sector, poor financial results are also a key cause.
When discounters pull out of routes, it can have a substantial impact on low-end airfares.
"We know that when low-cost carriers (LCCs) expand capacity and enter new routes, typically prices drop by about 20% in the first year," Berg said. "We expect to see something on the flip side of that if LCCs are pulling out of routes."
Katy Nastro, travel expert for the subscription service Going, which alerts members to airfare bargains, made particular mention of Spirit. The airline, which is going through a Chapter 11 bankruptcy restructuring, is flying 15.7% less capacity this month than a year ago.
"When Spirit is in the market, especially to vacation destinations, it makes it more affordable because they put pressure on the big guys," she said. "With these routes being cut, it takes away that pressure."
Deals might be had for Asia flights
Though Going expects bargains to be tougher to come by this year than last, Nastro said deals can still be found, especially to Japan, South Korea and other parts of Asia, where capacity continues to increase. Europe could also present opportunities, she said.
Overall, international airfares are down 4% for this year, according to a Kayak analysis.
"We're seeing increased competition in international markets, which could be why we are seeing a decrease in prices for international flights," said Paul Jacobs, Kayak's senior vice president for North America.