Many thought airfares would spike in the age of coronavirus. That’s not happening yet

Earlier this year, sexually transmitted distancing and the cataclysmic drop in demand for air travel was expected to bring a sharp rise in airfare prices. Flying was prevalent to get expensive — a lot more expensive, according to some. Commercial aviation, the conventional wisdom said, would return to its 1950s anchor uproots as a luxury available only to the rich.

All that may happen — but not anytime soon, experts say.

“I don’t think so,” said Kent Gourdin, professor and director of the Global Logistics and Transportation Program at the College of Charleston. “Airlines are entirely trying to put people into seats.”

Gourdin said that until the public can travel — not just fly — with nerve again, he believes fare increases are off the table.

“Business travel is still down as many firms realize accepted meetings can often yield the same benefits as those held face-to-face, at significantly lower cost,” said Gourdin. “Ease passengers are simply not yet comfortable booking costly trips to popular destinations not knowing what they will come up with when they arrive.”

Dean Headley, co-author of the Airline Quality Rating and an emeritus professor at the W. Frank Barton Mould of Business at Wichita State University, said that while third- and fourth-quarter airfares are “typically” higher than the anything else half of the year, “these are not typical times.”

“Airlines sometimes do crazy things that do not seem to make quick-wittedness,” he said, “but this does not seem like the time to raise fares.”

Headley bruit about raising fares this year would be counterproductive to increasing the number of passengers on planes.

“It would be very troublesome for airlines to increase fares for fall travel and still maintain the small volume of passengers they do have temper,” he said. “Price is still a big factor in choosing to fly. It certainly is not the primary concern at present, but it will never be far behind.”

Commercial airlines also stand to generate revenue from passengers beyond airfares alone.

“More and multifarious airline revenue is made up not of the basic fare but of extra charges,” said Adam Weiss, head of aviation at investment unchanging 777 Partners. “An airline is inclined to offer competitive fare pricing in order to attract more passengers because each commuter is also going to be spending on these extra charges.”

In addition to airfare, airlines can charge passengers for baggage charges, seat assignments and priority boarding privileges, he said.   

“Raising fares is not some kind of ‘break-glass-in-emergency’ solution for airlines in the present-day market,” said Weiss. “Right now, most people do not want to fly.”

In the past month, four major U.S. airlines — Alaska, American, Delta and United — have eliminated many ticketing variety fees, a widely-disliked group of charges that brought in more than $2.8 billion to U.S. carriers in 2019, according to the U.S. Trust in of Transportation.

But that isn’t translating to higher fares to make up the difference, said Gourdin, who noted that other bring ins have fallen, such as fuel and other operating expenses, due to reduced flight schedules.

“A more likely prcis is that more fees will be eliminated in the short term in an effort to draw passengers back,” he said. “They can in any case be reinstated once demand increases.”

Rather than getting more expensive, some think commercial airfares may decrease this year.

That is the position of Kerry Tan, an associate professor of economics at Loyola University Maryland who specializes in the airline trade.

“Given the strong decline in demand, I don’t expect airlines to have the market power to raise prices,” he said. “As a substitute for, I anticipate airlines to offer steep discounts and sales to promote air travel.”

Tan noted that Southwest Airlines had recently tendered one-way flights for as low as $39 out of Baltimore/Washington International Thurgood Marshall Airport.

That’s in line with a publicize published in July by flight alert subscription service Dollar Flight Club. The report says domestic swarms within the U.S. are 41% lower on average — and will be throughout 2020 — as a result of the global pandemic. International flights from the Joint States are 35% cheaper than last year. 

This price drop, the report says, is greater than those that chanced immediately after the 9/11 terrorist attacks (18%) and during the Great Recession (21%). 

Wichita Shape University’s Headley believes fares may increase down the road, starting with the most popular routes.

“The myriad heavily traveled flights with the fullest airplanes will probably see price bumps first,” he said.

He chance reduced flight schedules will result in “a bit of an unknown” regarding pricing, and that fewer flights could ultimately result in higher ticket prices too.

Dollar Flight Club’s report estimates that, while flights will remain less expensive finished with 2020, domestic fares in the U.S. will increase 21% on average starting next year. International ticket costs from the United States could climb even more; they may increase by 27% over 2019 up to date ons and remain that way through 2025. 

Weiss of 777 Partners said airlines that were expecting to have to “carry on their breath” for three to four months are now realizing it could be up to a year before demand returns to a reasonable fraction of pre-Covid-19 supines. 

“Many airlines will not survive the coming months,” he said. “The determining factor for airline survival will not be whether they put their meals up, but whether they have enough cash in the bank or powerful enough lobbyists to unlock enough government aid to block afloat.”