Why Are Plane Tickets so Expensive in 2022?

  • Higher fuel prices and strong demand increased airfare by 20% in March compared to the same time in 2019.
  • Online spending for domestic flights soared to $8.8 billion in March — 28% higher than pre-pandemic levels.
  • Hopper data shows inflation has driven domestic roundtrip tickets up to an average of $330.

Travelers may feel a dent in their wallets this year as higher fuel prices and strong demand drive up airfare.

On Tuesday, the Adobe Digital Economy Index published data revealing travelers spent $8.8 billion for online flight bookings in March, which is a 28% increase compared to the same time in 2019. While spending was up, bookings themselves were actually only 12% higher than in March 2019, the data showed.

Moreover, in the first quarter of 2022, consumers spent a whopping $21 billion on domestic airfare. To put that number into perspective, passengers spent $56 billion in total in all of 2021, according to Adobe.

Rising ticket prices can be attributed to spiking travel demand and fuel costs. The price of jet fuel, which is the second-biggest expense for airlines behind labor, has been rising since the Russia-Ukraine crisis disrupted the global distribution of crude oil.

US Gulf Coast data shows jet fuel settling at $3,343 per gallon on April 11. The price is about 35% higher than the beginning of 2022, which saw a fuel price of $2,195 per gallon on January 3, and double the price during the same time last year.

Fuel prices have contributed to staggering inflation, which this year is growing at its fastest pace since 1981, according to a US Labor Department report released Tuesday. The inflation in airfare led to a 20% increase in prices in March 2022 compared to March 2019, according to Adobe data. For comparison, the data showed airfare increased by 5% in February and actually decreased by 3% in January.

Meanwhile, data from travel app Hopper shows a 40% rise in airfare since the start of 2022, with an average domestic roundtrip ticket costing $330. The company predicts ticket costs will increase by another 10% in May.

Typically, changes will be reflected in airfare over the next few months, but Hopper explained that the “extent to which it appears can vary depending on airlines’ hedging programs and how much of the cost is passed through to the consumer.” However, it is possible airlines will absorb some of those costs, the company said.

Hedging is a strategy that some carriers, like Southwest Airlines, use to ensure they are not hurt by unexpected increases in jet fuel prices, like the spike that was brought on by the war in Ukraine. The company agrees to buy fuel months or years in advance at a set rate, allowing it to offset the increasing costs.

According to media outlet Axios Atlanta, Southwest has hedged about 64% of fuel for the remainder of 2022, while rival American Airlines stopped hedging in 2014.

Although consumers may be put off by the higher ticket prices, they are more willing than ever to shell out more for flights after two years of travel restrictions, CNBC reported.

Delta Air Lines CEO Ed Bastian told the Associated Press that bookings have not been deterred by the pandemic or inflation, saying “the last five weeks have been the highest bookings in our history.” The company lost $940 million in the first quarter of 2022, mostly due to rising fuel prices.

He also said that travel demand will remain strong enough over the next two to three months to allow Delta to cover the higher fuel costs, the AP reported.

Adobe Digital Insights lead analyst Vivek Pandya explained that the strong travel demand is driving inflation.

“The unleashing of pent-up demand has been a major driving factor, as the desire for air travel is coming back more aggressively than anticipated,” Pandya said.

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