According to Labor Department data issued on Thursday, airfares increased by about 43% compared to the same time last year, a record-breaking rise that topped the department’s monthly Consumer Price Index (CPI) report.
The fastest-growing category was airfare, which was followed by utility bills for gas (33.1%) and eggs (30.5%). Fuel climbed 18.2% to place fourth.
The rise in airfares is the result of an unusual trend in which demand has remained high into the fall “shoulder season”, which falls between the busy summer and vacation travel seasons. While business travel is slowly picking up as more people return to their offices, pent-up demand for leisure travel remains strong after nearly two years of closed borders.
Glenn Hauenstein, president of Delta Air Lines, mentioned the abnormally high travel demand, particularly to Europe, during a conference call with investors on Thursday.
“Demand for trans-Atlantic travel is extending well into the fall,” Hauenstein said. “Starting in October, we anticipate flying more trans-Atlantic capacity than 2019.”
According to Hauenstein, this robust demand is expected to continue through the holidays.
The airlines’ responses to the numerous operational setbacks during the spring and summer, when carriers reduced capacity to create more headroom in their networks, have hampered travel price increases.
While this had the advantage of giving airlines more freedom in dealing with delays and cancelations due to events such as severe weather, it also meant that airlines inadvertently depleted the supply of the system. Prices will naturally rise as long as supply is limited and demand is high.
At least through the vacation season, airfares are expected to remain high. According to travel booking company Hopper, prices for Christmas flights are up 55% over last year and 19% over this year, while prices for Thanksgiving flights are 25% higher than last year.
However, there are indications that Americans’ holiday plans are starting to be impacted by inflation. According to a recent Bankrate study, 79% of the 43% of American adults who want to travel over the holidays are altering some aspects of their travel arrangements as a result of inflation.