Airfares were already dropping. Here's why they could go even lower in 2024

Inflation has hit most of the economy, but that’s hardly the case with airfare. Not only are airfares down 6% year-over-year based on January 2024 prices, but they’re even down 15% versus a decade ago. That’s according to consumer price index data from the U.S. Bureau of Labor Statistics published in February. Some experts predict airfares to international destinations will drop even lower in 2024.

According to the American Express Global Business Travel Air Monitor 2024 report, prices on certain international routes may drop as much as 12%.

Here’s how AmEx GBT anticipates average economy airfares will change in 2024 versus 2023, for a sampling of regions:

— South America to North America: Drop by 11.9%.

— North America to Central America: Drop by 7.8%.

— North America to Asia: Drop by 7.5%.

— Asia to North America: Drop by 5.2%.

— North America to Europe: Drop by 3.5%.

— Europe to North America: Drop by 1.2%.

So, why are airfares dropping?

EXISTING AIRLINES ARE OFFERING MORE FLIGHTS AND ROUTES

2023 was a huge year for travel, with several records broken. The U.S. State Department issued a record 24 million passport books and cards during the 2023 fiscal year, signaling increased interest in travel abroad.

Katy Nastro, a spokesperson for airfare tracking website Going, has seen an increase in international flights booked as well.

“For example, in 2023, almost 14% more people flew between Costa Rica and the U.S. than pre-pandemic,” Nastro says.

Airlines added 10% more flights between the U.S. and Central America in 2023 versus 2022, according to scheduling data analyzed by Going from aviation analytics company Cirium Diio. In 2024, airlines are expected to add another 10%.

Last year’s high traveler volume has prompted airlines to increase flight schedules to other parts of the world. For example, Delta Air Lines announced that — in light of a record-setting summer 2023 — it would launch its largest-ever transatlantic schedule for summer 2024. That includes new daily service from New York to Naples, Italy, beginning in May, as well as more flights from the U.S. to Paris; Venice, Italy; Barcelona, Spain; and Dublin.

For travel from North America to Asia, there are 5.5 million more airline seats for sale in the first half of 2024 versus the same period in 2023. That’s a 35% year-over-year increase, says Jeremy Quek, principal global air practice line lead at AmEx GBT.

“More availability in turn can help with pricing,” Nastro says. “Heading into 2024, in theory, this should reduce overall prices.”

BUDGET AIRLINES ARE BRINGING DOWN PRICES

New, smaller airlines (particularly low-cost carriers) are also competing for customers, which helps bring down airfares industrywide.

For example, Norse Atlantic Airways is a Norwegian low-cost airline that started flying to the U.S. in 2022. Now it operates 13 routes between the U.S. and five European cities. Come May 2024, Norse will launch summer flights between New York and Athens, Greece.

A RETURN TO NORMALCY AFTER COVID-19

Quek says much of the phenomenon of falling airfares is a post-COVID-19 pandemic recalibration, considering so many airlines reduced schedules in 2020.

“Airline schedules, especially on long-haul international flights, are set at least six months out,” Quek says. “Restarting a route can take even longer. As countries announced border reopenings, airlines were constrained on how quickly they could reintroduce flights.”

And it’s not just schedules returning to normal, but airfares too. Airfares originating in the U.S. hit all-time highs in May 2022, according to Bureau of Labor Statistics data, when the summer of “revenge travel” was in full swing. Quek says this year’s price decreases are largely a return to pre-pandemic equilibrium rather than an extraordinary drop in prices.

AIRFARES ARE FALLING, BUT DON’T WAIT TO BOOK

Though airfares are falling, don’t delay booking in hopes that they’ll fall further. Going advises booking two to eight months out for international travel.

“Airfares tend to increase the closer you get to booking,” Nastro says. “In reality, it is far more likely for airlines to sell tickets at higher prices at the last minute.”

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