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coronavirus recovery

U.S. Airfares Heading Up After Record 20 Percent Fall in 2020

Edward Russell

April 20th, 2021

Southwest Airlines ticket counter Seattle

Intrepid U.S. travelers who flew during the coronavirus pandemic got a real bargain in 2020, much to the chagrin of struggling airlines.

Average domestic airfares fell 18.6 percent to $292 compared to 2019, according to new data from the Bureau of Transportation Statistics. This does not include spending on ancillary fees, like those for checked bags or extra-legroom seats. By themselves, airfares were at the lowest level adjusted for inflation since the bureau began collecting data in 1995.

(Bureau of Transportation Statistics)

Airlines were hit hard by the Covid-19 crisis in 2020. At one point during the year, passenger numbers fell to levels unseen since the 1950s. Traffic has climbed, albeit with setbacks, since last April, with Transportation Security Administration screening numbers holding well above 1 million people a day since March 11.

But that drop in demand pushed airfares down, and the industry spilled red ink. The industry posted a collective $35 billion net loss during the year, according to data from Airlines for America (A4A).

Things have begun to turn. A strong uptick in net bookings in March helped some airlines put daily cash burn behind them — though that is not to be equated with turning profits — as they head into the traditionally busy summer travel season. While lucrative business travelers continue to mostly sit out the recovery, the dramatic return of leisure flyers has fares already beginning to recover — especially with capacity still below 2019 levels.

“All U.S. airlines appear to be benefiting from a broad-based strengthening of fares since March,” wrote Raymond James Analyst Savanthi Syth in a report on April 18. She cited data that showed fares for travel in the future rising — an indicator of summer travel bookings — even as the price of some close-in tickets fell slightly.

And earlier in April, Delta Air Lines President Glen Hauenstein told analysts that summer leisure fares should be “within the range of where we were in 2019.” That uptick, even without many corporate road warriors, has the Atlanta-based carrier optimistic that it could return to profitability by the third quarter.

It is worth noting, however, that all U.S. airline financials, including Delta, benefit from federal payroll support that cover the majority of their labor expenses through September.

Edward Russell

April 20th, 2021

Tags: coronavirus recovery

Photo credit: U.S. airfares hit record lows in 2020. Flickr / Evan Didier

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