Expect higher airfare Memorial Day

Yahoo and NBC said on May 15 that travelers should expect higher airfares heading into Memorial Day and deeper into the summer booking season. The report pointed to two pressures: higher jet fuel costs tied to the war in Iran and the disappearance of Spirit Airlines, a major ultra-low-cost carrier that stopped flying this month. AAA, which released its Memorial Day forecast on May 11, said 3.66 million people are expected to fly domestically between May 21 and May 25, even as later bookings face a less favorable pricing backdrop. ### Why are fares rising now instead of earlier in the spring? CNBC reported on May 2 that average round-trip domestic airfare reached $361 as of April 20, up about 8% from $335 on Feb. 23, before the Iran war began. The same report said average international round-trip fares climbed to $1,097 on April 20, up 42% from $774 on Feb. 23. (yahoo.com) Hayley Berg, lead economist at Hopper, told CNBC that airlines are raising summer prices largely because of jet fuel costs. Jet fuel typically accounts for 20% to 30% of airline operating expenses, Berg said, making it a significant driver of airfare. U.S. Energy Information Administration data released on May 13 showed the U.S. (cnbc.com) Gulf Coast kerosene-type jet fuel spot price at $4.111 a gallon, up from $3.992 the previous market day and above recent weekly readings around $4.00. That helps explain why fares booked earlier looked cheaper than tickets being priced closer to departure. ### What does Spirit Airlines have to do with Memorial Day prices? (cnbc.com) Spirit Airlines ceased operations on May 2, according to Yahoo’s related coverage and Associated Press reporting surfaced in search results. The carrier had long been one of the biggest price setters in the U.S. leisure market, especially on domestic routes where low-cost carriers force larger airlines to match or stay near discount fares. (eia.gov) Yahoo’s May 15 video report said Spirit’s bankruptcy is one reason travel will cost more this summer. That does not mean every route will jump at once, but it removes a large source of low-fare inventory from the market just as holiday demand builds. ### Didn’t AAA say Memorial Day flights were cheaper this year? (creators.yahoo.com) AAA said on May 11 that round-trip domestic flights for Memorial Day were 6% cheaper than last year, with an average ticket cost of $800. AAA also said those figures reflect what travelers paid when they booked their trips, and that most of those trips were purchased before rising jet fuel prices started affecting airfare. (yahoo.com) That timing matters. AAA’s booking-based snapshot describes tickets already bought, while Yahoo and CNBC are describing the market travelers face if they are still shopping now. The two reports are not contradictory; they cover different points in the booking cycle. ### How big is holiday travel demand this year? (newsroom.aaa.com) AAA said 45 million Americans will travel at least 50 miles from home for Memorial Day between Thursday, May 21, and Monday, May 25. That would be slightly above 2025 and a Memorial Day record, with 39.1 million going by car and 3.66 million flying. (newsroom.aaa.com) Stacey Barber, vice president of AAA Travel, said demand remains strong despite higher fuel prices. Higher demand does not by itself guarantee higher airfares, but it leaves airlines with more room to hold or raise prices when fuel and capacity pressures are already building, according to the market data cited by CNBC and Yahoo. (newsroom.aaa.com) ### What should travelers watch over the next week? May 20 is the next scheduled EIA release for spot petroleum prices, including jet fuel, after the agency’s May 13 update. Travelers still booking for the May 21-25 holiday window will also be shopping into a market without Spirit flights, a change already reflected in Yahoo’s May 15 warning and in reporting on the carrier’s shutdown. (eia.gov) (newsroom.aaa.com)