While inflation has been making headlines recently, with many referring to the around 8% number from the Consumer Price Index, certain consumer expenditure categories, like plane tickets, continue to outperform it. The consumer price index for Airline tickets has increased by 25% in the last year, the highest increase since the Federal Reserve Bank of St. Louis began tracking the index in 1989. According to the Bureau of Labor Statistics, airfares increased by 18.6% in April alone.
Despite rising rates, Americans are not hesitant to use their credit cards to plan a vacation. According to a recent Bank of America Institute poll, expenditure on Airline and travel firms has increased by 60% year over year. Many Airline have been drowning in debt and battling to return to profitability since the start of the epidemic.
While travel demand has recovered, Henry Harteveldt, travel industry researcher at Atmosphere Research Group, tells Select that seat capacity is still down 6% from pre-pandemic levels. Airline are also dealing with a shortage of pilots and flight attendants, as well as rising labour expenses. All of these factors have conspired to cause ticket costs to rise. “Market forces at work,” as Harteveldt puts it.