Have Airfares and Hotel Prices Finally Peaked?

20.09.2023 - 13:41 / afar.com / Katy Nastro

Earlier this year, the cost of flights had reached some of the highest levels they had been in years as swarms of travelers embraced revenge travel with a fervor, flaunting their willingness to pay exorbitant prices for flights to just about anywhere as everyone played the game of postpandemic travel catch-up. What we didn’t know as we handed over our credit cards with a whatever-it-takes resolve was that some degree of relief was on its way.

In July, airfares fell for the fourth month in a row, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index. And that downward trend has made airfares much more affordable—at least for now.

“With pent-up demand getting released, as well as more transatlantic flights being added” air travel is “renormalizing,” says Katy Nastro, travel expert at flight deal tracking service Going.com. “Typical seasonal changes where we see higher prices during peak seasons, and lower prices during shoulder or off-peak seasons are very much back in play.”

Going.com reports that demand for Europe travel in particular peaked in April and has been falling ever since. The softening demand comes as transatlantic flight capacity continues to build back up “adding downward pressure to fares,” according to Going.com. Data provided by aviation analytics company Cirium reveals that the number of airline seats available between the United States and Europe over the next three months is up 15 percent compared to October through December 2022 in large part because aircraft deliveries that were put on hold during the pandemic are finally starting to ramp back up and get injected into the network.

And at least some airlines have admitted that bookings this fall are softer than they originally thought they would be. Frontier Airlines last week updated its earnings guidance to reflect a “significant unexpected change in the booking trajectory,” adding that “in recent weeks, sales have been trending below historical seasonality patterns.”

One of the factors at play, according to Going.com, is the rebirth of budget airlines, with several low-cost carriers having entered the mix since the pandemic, including Breeze Airways and Norse Atlantic Airways. (The latter now offers transatlantic flights from eight U.S. cities.) These lower-cost players bring additional competition to the marketplace, releasing some of the demand buildup while simultaneously adding downward pricing pressure.

As the summer travel craze cools off, the resulting drop in demand just as supply is increasing means that airfares for autumn have decreased nearly 30 percent across the board from peak summer prices, according to travel booking site Hopper. Average Europe airfares from the United States are now $728 round