Passengers at Reagan National Airport in Arlington, Virginia on May 26, 2023. (Image: Andrew Caballero-Reynolds | AFP | Getty Images)
The summer season is bringing cheaper flights as airlines ramp up their service. Recent U.S. inflation data reveals that airfares dropped by 8.1% in June compared to the previous month, marking the largest decline in nearly a year and the second biggest drop since April 2020 when the Covid pandemic drastically reduced air travel demand. Airlines are benefiting from lower fuel costs and a sustained increase in travel. Transportation Security Administration daily airport screenings have now surpassed pre-pandemic 2019 levels.
Delta Air Lines reported its highest-ever quarterly earnings on Thursday and anticipates even more record revenue through the beginning of fall, prompting an upward revision of its full-year forecast.
It is worth noting that Delta’s revenue per available seat mile, a measurement of how much airlines generate for each mile flown per seat, rose by 1% in the last quarter compared to the same period last year, despite a 17% increase in capacity. This indicates that fares and revenue are holding up well despite the expanded services.
Interestingly, international fares seem to be performing better as travelers opt for trips abroad, departing from the previous trend where domestic destinations were preferred during pandemic-related travel restrictions. Delta’s domestic revenue unit revenues fell by 1% in the quarter compared to the same period in 2019, but trans-Atlantic unit revenues rose by 22%, trans-Pacific by 29%, and Latin American service unit revenues were up by 16%.
Airlines have been particularly aggressive in adding a significant amount of service to Europe this summer, and the higher unit revenues in these regions demonstrate that fares there continue to remain strong.
United Airlines and American Airlines will provide their insights on demand next week when they release their financial results.
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