Domestic US air fares have dropped to their lowest since records began, reflecting just how devastating the coronavirus pandemic has been to the aviation industry. In a report by the US Department of Transportation, figures show domestic fares have dropped to an average of $259 in the second quarter of 2020.
What the figures show
The report, compiled by the Bureau of Transportation Statistics, analyzed 25 years of aviation data. In Q2 2020, fares were slashed by an average of 26% compared to Q2 2019 – the largest ever dip on record. The coronavirus pandemic has hit air fares even more than the post-9/11 period, which saw fares drop by 14% in Q4 of 2001.
New air fare data: $259 avg domestic fare in 2Q2020 was the lowest on record, inflation adjusted, in records dating from 1995, down 22% from previous low of $334 in the 1Q2020. COVID-19 struck near end of 1Q2020. #airlines #airfares #travel https://t.co/b57QgtSdL1 pic.twitter.com/XYrpsrP4gV
— TransportStats (@TransportStats) October 26, 2020
Certain routes have seen prices cut to even greater levels, whereas others have done well to remain stable. For example, the cost of flights between Boston and Dallas are down a whopping 44%, whereas flights from New York to Los Angeles are down a more modest 19%. Data in the report was sourced from major U.S carriers, with a sample size of 10% of sold flight tickets.
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How are airlines responding?
As demand slumps to unprecedented lows, U.S carriers have explored a variety of initiatives to keep the industry moving. Through Q2 2020, many carriers have aimed to entice business and corporate passengers, who ultimately failed to fly in sufficient numbers to meet expectations. Jim Ogden, director of analytics firm Cirium, commented,
“The obvious reason for this decline is the 87% decline in passengers, which mostly relates to the sharp drop in demand for business travel. The airlines were trying to entice whatever passengers they could during the period and this trend is likely to continue.”
At the onset of the pandemic, airlines drastically slashed their prices in an attempt to attract passengers, with tickets going as cheap as $16 for five-hour flights. On an optimistic note, U.S daily air passengers reached 1 million for the first time since the crisis hit in March. However, this still accounts for just 40% of the figure from the same day in 2019.
Fares are likely to rise again
An analysis by Dollar Flight Club found that fares were down by 41% in August compared to 2019 prices. However, it also predicts fares to rise again by around 20% through 2025. Data from the aftermath of 9/11 and the 2008 recession shows that fares rebound fairly quickly, often within just a matter of years.
Most experts agree that the aviation industry will be considerably smaller when things start returning to normal. This may translate to higher air fares in the future due to a lack of competitive options on routes.
However, some have speculated that the COVID pandemic will ultimately be good for the industry by improving efficiency and consolidation. For at least the next couple of years, air fares are likely to remain low for passengers in the domestic U.S market.
Have you been able to pick up any major bargains on US air fares? Let us know the details in the comments section.