Summer Airfare Forecast 2012: Expensive but 'Not Too Expensive'
Updated: February 2012
Summer flight schedules are now popping up on U.S. airline reservation systems, although it's a still a little early to buy (yes, airfare can be purchased 'too soon' as well as too late). More on when to buy summer airfare – and a poll, below.
Airfare Prices will Rise
But the bigger question is, what will prices be like this summer?
In a word, expensive – but not overly expensive. That's because at the end of the day, it'll be potential travelers who control prices by making the big decision: to fly or stay at home.
Listen to airfare analyst Rick Seaney's advice – when to buy summer airfare:
Blame it on Oil
One of the biggest factors contributing to the rising price of airline tickets is oil, which has been stubbornly hovering around $100 per barrel. And while that translates into grimaces at the pump for us as prices climb to $4 a gallon, it's even worse for jet fuel prices.
This doesn't mean airlines would give shoppers a big price break if oil prices suddenly plunged – you may recall that during last summer's 'ticket tax holiday', most carriers pocketed the government tax savings anticipated by consumers with a strategically-timed price hike.
And speaking of hikes, by mid-February, airlines had engineered three price hike attempts, and two of them were successful.
In any event, I just do not expect oil prices to drop significantly (though I'd be delighted to be wrong).
Consumers Will Say 'Enough'
Other factors contributing to the rise in summer airfare prices are the same ones we see every year:
- Airlines know summer is when most people want to fly
- Airlines know most people are willing to pay more for summer flights
So prices will rise due to demand and oil. There is a cap, though – it will be recognized as that point where shoppers say they just can't afford to fly. Since airlines can't afford to have potential passengers reach that point, that will have a moderating effect on prices.
Best Time to Buy Summer Airfare
Unless you believe prices at the pump will hit $5 a gallon (or have inside information to that effect), it's still a bit early to shop – wait about 3 months before departure. If you plane to depart on vacation in early June, for example, start shopping in early March. However don't buy earlier than three to three and a half months before departure either or you will pay a 'mid-range' price for your tickets and miss the best-priced fares.
The Political Factor in Airfare Prices
2012 is shaping up to be anything but typical for airfare prices – and a lot of that can be traced to presidential election year politics, which has the potential to send fuel in any direction – especially when you add unrest in the Middle East to the mix.
Unfortunately, at this writing, only a crystal ball could tell you which direction prices will go. Maybe.
More Airfare Hikes
On Monday Feb. 14, 2011, the FareCompare proprietary airfare processing system noted significant increases in domestic airline ticket prices for both business and leisure passengers–which means summer airfares for vacation flights will cost more.
Business travelers are accustomed to paying a hefty premium for the "luxury" of booking travel at the last minute (inside 14 days of departure) on schedule-friendly non-stop flights. This usually leaves the cheaper seats for leisure travelers who can book earlier. The new airfare hikes now make it more costly for both.
Airline Ticket Prices – What You'll Pay Now
On Feb. 14, Delta initiated a domestic business airfare hike – effective immediately – of between $40 and $120 round trip that was widely matched by other legacy airlines in the ensuing 24 hours. This hike on walk-up and last-minute departures follows on the heels of a similar hike last week on business travelers who typically pay more than $800 round trip for their tickets.
More importantly for cost-conscious leisure travelers, as of Monday the airlines also began putting "travel date" fences on their cheapest airfare so that discounted seats could only be purchased through mid June, thereby bumping the cheapest summer airfare prices by as much as $250 roundtrip (see the examples below for New York departures):
On top of these "base" domestic price increases for summer departures, airlines also continue to file "peak travel" surcharges for summer departure dates of between $20 and $60 round trip – with the higher amounts on the busiest departure days of the week.
Outlook for Summer Airfares
The question for consumers is whether airline ticket prices will come down in the following months as airlines begin to more actively manage summer airfare inventory — or, on the flip side, will summer airfare prices get worse?
We are nearing the historical "sweet spot" for summer travelers looking to score a deal on domestic tickets who shop in earnest about 3-and-a-half months before departure — the time frame when airlines tend to start offering up some cheaper seats in order gauge demand in comparison to their historical booking models.
It is likely that early bird shoppers for summer airfares will be shell-shocked when getting quotes. Waiting may be their only option.
With the volatility of jet fuel prices and the reticence of airlines to increase capacity coupled with firming demand, it's not hard to imagine a summer of some the highest airline ticket prices in years.
We will continue to monitor the situation closely and update as significant changes occur.