5 secrets behind airfare declines in 2023 and why business class is a bargain right now
We often hear that airfares are going up. These are the same stories about people taking on more credit card debt than ever and the price of eggs. Must be adjusted for inflation. Even though the price of a flight ticket is higher, the actual cost of air travel is lower. Interestingly, business class fares to Europe are both nominally and actually falling.
According to data from Cirium, U.S. domestic airfare prices have increased by 9% compared to 2019, and inflation has increased by 19%.In other words, the ticket cheap In the real sense. (Ticket prices in Europe have risen more than in the US, but still lag behind inflation.)
Additionally, the nominal cost of U.S. domestic airfares fell by 4% in the second half of 2023 as inflation slowed.
- U.S. domestic airfares in 2023 were $179.25, up 9% from $163.63 in 2019, but significantly lower than the 19% increase in CPI-derived inflation. Real airfares in 2023 were lower than before the pandemic.
- Airfares declined year-on-year from August 2023 and were actually 9% cheaper in nominal terms in December 2023 than in December 2022. This is because inflation has eased and is no longer supporting airfares, which were already falling in real terms. .
- In contrast, nominal airfares in Europe rose by 8% in 2022, reaching a level 12% higher than in 2019. A similar overall inflation adjustment is required, but consumer savings are less pronounced.
- Transatlantic bus fares rose 14% compared to 2019, but still below the rate of inflation. However, because transatlantic capacity has been slower to recover from the pandemic than domestic capacity, the difference was not as pronounced as in domestic fares.
- Interestingly, Cirium found that business class was actually cheaper.I assume this as follows
The result is a premium leisure alternative to many business trips in the front cabin.
[T]Lanza Atlantic's business class airfares will be 3% cheaper compared to 2019, and business class fares in December 2023 will be 7% cheaper compared to December 2019. The average business class fare in 2023 was $1,845.
Of course, first class on domestic flights is likely to be cheaper than before.
As demand patterns changed during the pandemic and recovery period, there were higher airfares, and in many cases airlines were delayed in rebuilding capacity as a result of laying off employees (government subsidies ostensibly do not allow them to do so). (even though it was intended).was any change in Relative Prices due to inflation (increases on some lines are offset by increases on others), or… temporary as capacity is eventually restored.
Boeing's delivery times (and to a lesser extent Airbus' delays) could limit seat supply and potentially reverse this trend.
