If you haven’t booked your summer travels yet, there might actually be a bit of a benefit to procrastinating this year. It’s possible we could see airfares continue to come down.
As we head into the busy summer travel months, almost all U.S. airlines have indicated to investors during the most recent corporate earnings season that the industry has entered a period of uncertainty due to changes in the economic climate, and there may be less demand than previously expected this year.
Afar spoke to four experts in the aviation and travel industry to try to predict the impact this “softer” demand might have on the price of your next plane ticket. What’s bad news for airlines could be good news for travelers looking to book upcoming flights.
Signs point to lower airfares in 2025
What has caused this uncertainty? As is often the case when the economy is at play, it’s more than one thing.
“Softer demand from business and government travel, declining inbound international tourists from specific regions, and insecurity around the economic outlook have all led airlines to readjust their outlooks for the rest of the year,” Katy Nastro, travel expert and spokesperson for the Going app, told Afar. “That’s a yellow flag that even [the airlines] aren’t too confident in what will happen next. And because of all these factors, it’s looking like all signs point to yet another dip in average airfare.”
Indeed, in March, United’s first-quarter earnings report revealed that government-related travel dropped by as much as 50 percent at the airline following the administration’s cost-cutting measures, Reuters reported.
Given all the current economic conditions, Henry Harteveldt, an aviation analyst and president of Atmosphere Research Group, agreed with Nastro that airfares are primed to come down.
“I think airfares will be more modest than perhaps they were a year ago,” he told Afar, noting that oil prices are also falling, which typically leads to lower jet fuel prices and would offer airlines “more financial leeway” to decrease their pricing.
John Grant, chief analyst at aviation data analytics firm OAG, put a number to his predictions, telling Afar he expects airfares to see “around a 3 to 5 percent fall in the peak summer period” this year and a “slightly deeper fall in the last quarter of the year of perhaps 5 to 7 percent.”
Although they all noted that trying to forecast airfare pricing is notoriously difficult—both Harteveldt and Nastro said it was like trying to predict the weather months in advance and Grant said if he knew “precisely” what would happen he would be “a wealthy man”—experts nevertheless agreed it’s more likely prices will decrease rather than increase in the months ahead.
You don’t need to wait for airfares to decrease—some already have
In truth, airfares have already dropped somewhat this year compared to last year, according to the latest figures from the U.S. Bureau of Labor Statistics. After falling 4 percent in February, airfare fell again in March with a 5.3 percent drop from a year ago.
Harteveldt said that, anecdotally, he has noticed some “really attractively priced airfares” recently, like a Southwest Airlines sale with fares starting at $39 instead of the usual $49.
Despite a decline in inbound international tourists, international fares are generally holding steady when compared with domestic prices, thanks to a still-strong dollar that is encouraging Americans to take European vacations. But there’s discounting there, too, Nastro found.
“Take NYC to Dublin, end of July, a peak time frame, for only $412 round-trip,” she said. “That type of flight should cost upwards of $800 to $900 round-trip during a peak month like July, yet there is still availability across some [peak] dates.”
Airlines will try to keep prices up, even in uncertain times
As with any business, airlines do not want to lower prices even when demand remains an open question.
“Airlines, through these extremely sophisticated pricing and revenue management software systems that they use, have become experts in matching fares to consumers’ willingness to pay,” Harteveldt said. “It’s like Las Vegas—the house always wins.”
If airlines can continue to optimize their planes, schedules, and routes further, it’s possible that they can get through this period while keeping airfares on par with where they’ve been, planes fuller, and flights more profitable. Delta Air Lines and United Airlines have both said they are reducing capacity this year to match weaker-than-expected demand and fewer opportunities for growth. Airlines are likely to make more changes throughout the year in response to further demand changes. Lower fares could be temporary as the industry adapts to an evolving economic, financial, and travel landscape.
There’s also the human element: People like to go on vacation, which could save demand from spiraling. Travel is not a necessity like food costs or paying the mortgage, but U.S. households typically “prioritize saving for travel” in their budgets, Hartveldt said, citing industry research.
Hayley Berg, lead economist at the travel booking site Hopper, agreed.
“When consumers have faced [economic] headwinds in past periods, like the 2008 to 2011 recession and the postpandemic recovery period, they have consistently protected travel expenditure to their best ability,” she said.
Is there an ideal time to book flights in the current environment?
To take advantage of lowered airfares, don’t wait around. If you see a deal that looks good, book it, Harteveldt said.
“What I will tell people when it comes to booking flights: If you find flights that meet your schedule, budget, and any other criteria . . . go ahead and book,” he said. “Don’t try to outsmart the airlines.”
