With war in Europe and oil at a decade high, many travelers fear that cheap flights will quickly dwindle. Average airfare prices have increased over 5% over the last month or so, which is one of the highest jumps we’ve seen over the past twenty-five years. Are we all going to be stuck in our hometowns because affordable flights are dead? No. Phew.
Scotts Cheap Flights recently released a blog giving details that cheap flights are here to stay and breaking down some important stats that explain why cheap airfare aren’t going anywhere. So yes, rates have increased over the past year, but they’re significantly lower than two years ago and even lower compared to a decade ago. According to Scotts:
- Compared to last year, rates are up 12%
- Compared to two years ago, rates are down 23%
- Compared to ten years ago, rates are down 40%
If rates are down compared to two years ago, that’s fantastic news. We flew multiple international trips between 2017 and 2020 and each of those years we were able to find some incredible deals at higher rates, which bodes well for any future travel we have planned.
Another important aspect to understand airline levels. Scotts describes levels as what the airline charges for airfare. Based on their data that looks at airfare levels over the past thirty years, levels are way down. Lower than what they were in the early 90’s. So again, even though pricing is rising, compared to 10, 15, even 30 years ago, prices are still lower. This is good news as you look to plan future trips and there isn’t the volatility in ticket prices.
Two other pieces of the puzzle make us feel cheap flights are going nowhere and that is understanding average airfare and how airlines make money. Starting with average airfare, it’s misleading. Like all averages, outliers can change the story. Are they consistently searching the same timeframe to the trip, are they averaging the full year and on and on and on? What I mean is if you’re looking at average cost of travel from Chicago to Europe and it’s May, the cost of flights for June, July and August will be exceptionally high, making the average rise, causing the cheap flights available in October, November to be misrepresented. Another way to look at is there’s two flights in April for $250 and the other is $1,000 and two flights in May for $500 and $600. Clearly May is a cheaper average, but April has the cheaper flight. Buy the cheaper flight, not what month has the cheaper average. In the end, the average is meaningless.
The next aspect is to understand how airlines make money. Previously, it was load up the plan, charge the amount of money it takes to become profitable and away you fly. This caused flights to consistently rise in price to keep up with inflation, oil prices, etc. Now airlines make money through credit cards, expensive business and first glass seating, seat selections, bag fees, the model has changed. They aren’t dependent on filling economy which allows them to keep that section flat on pricing, keeping up with discount airlines. To me, this is the most important piece as to why affordable flights are staying. The economics to the industry have adjusted and diversified to remain profitable.
In short, cheap flights aren’t going anywhere, despite the average cost going up. As we’ve seen pricing really isn’t increasing as we looked at the long-term pricing. Airlines have changed the way they make money as well, allowing Economy pricing to remain stable. Airlines will continue to offer cheap fare to all destinations, which is exciting. Don’t panic, keep searching and we will do our best to keep you up to date on what’s available for travel. If you see an article saying that travel is about to get more expensive, remember, they also live off clicks. Headlines are often not reality. Happy travels.