When will airfares come down? 'Do not watch for a plunge.' Kerry Hannon Senior Columnist Thu, July 2, 2026 at 3:35 AM PDT 4 min read EXPN.L As jet fuel prices surged this spring, airlines promptly hiked up airfares and fees. Now fuel costs are drifting downward, but that doesn't mean airfares will follow in any meaningful way soon. "Do not watch for a plunge in airfares like what's happening in gasoline prices," Michael Boyd, an aviation i ndustry consultant , told Yahoo Finance. While average airfares have declined modestly in recent weeks, according to tracking firms , they're more than 20% higher than a year ago. Both domestic and international fares peaked in May, but flights within the US are roughly 24% more expensive than a year ago, while international flights are up 16%, according to Kayak . But that isn't stopping people from hitting the skies. Seven in 10 Americans said they already are or are planning to travel this summer despite the price hikes, with only 13% indicating they've canceled travel, according to new Experian data. "Jet fuel is dropping, but the indications are that the market can bear higher costs of air travel," Boyd said. "That will be the driving pricing consideration in the future." Prices for jet fuel remain high On Tuesday, the average price of a gallon of jet fuel was $2.86, according to the tracking firm Argus . That's a drop of more than $2 per gallon from the peak in April, though still higher than before the war in Iran started in February. "Oil supply through the Strait of Hormuz remains uncertain, and it is likely to take time before the benefit of lower oil prices is reflected in 'normalized' jet fuel pricing," according to Willie Walsh, head of the International Air Transport Association, which represents airlines around the world, in a new report. "In the meantime, airlines who are operating on a 2.0% margin will have little choice but to continue testing demand resilience with higher fares that attempt to cover elevated fuel costs." Even if fuel continues to dip lower, airlines may not trim fares for months. "The airlines lost a lot of money in the second quarter because they'd already booked a large portion of the quarter and then suddenly fuel spiked," Atul Maheswari, an analyst at UBS Group in the transportation sector, told Yahoo Finance. "So they're going to try to recover some of that before really passing along the benefit of the moderation in fuel prices." Demand to take off is unabated With the flying public taking sticky prices in stride, the airlines are taking note. "While demand remains strong in the US domestic market, then air fares will remain at their current levels," said John Grant, analyst at aviation data provider OAG . Story Continues Historically, when fuel declines, fares fall with it, according to a new Melius Research brief published Wednesday. "The industry has rarely proven it can hold pricing once the cost pressure justifying...
🔥 EXCLUSIVE PARTNER OFFER
ANENG 681 Rechargable Digital Professional Multimeter Non-contact Voltage Tester AC/DC Voltage Meter LCD Screen Current Tester
Special Price
🔥 Limited time offer! Grab your favorite item at an incredible price. Quality guaranteed!
Affiliate link — Commission earned at no extra cost to you
© EcoNews DZ — Global Economic & Financial News
Comments
Post a Comment