US Airfare Prices Are Down as Jet Fuel Prices Drop

Airfare prices in the United States experienced a significant decline in June, marking the third consecutive monthly drop and the largest decrease since July of the previous year, as reported by the US Bureau of Labor Statistics. 

The decrease, which reached 8.1%, was the second-largest monthly decline since April 2020 when the airline industry suffered a severe blow due to the onset of the pandemic.

June’s airfare prices plummeted by 18.9% compared to the same period last year. This decline can be attributed to the reduction in jet fuel prices, which have fallen by over 23% this year, presenting a favorable scenario for airlines. Fuel costs and labor expenses are the two primary expenditures for airlines, and historically, airfares have mirrored the fluctuations in fuel prices.

The decline in prices comes at a time when the industry is preparing for a surge in summer travel that is expected to rival the record levels seen in 2019. According to TD Cowen, approximately 275 million people are projected to travel between May 25 and September 4, representing a 7.4% increase compared to 2019 and a 19% increase compared to last year.

Bloomberg’s Joe Weisenthal also pointed to a surge in jet fuel demand from commercial passenger flights. Data from Bloomberg NEF shows a 21.3% increase in year-over-year in global jet fuel demand.

The rise in travel demand, particularly for domestic and near-international trips, has been a driving force behind the industry’s recovery from the pandemic. This will be the first post-pandemic summer where most Covid-related restrictions in destinations around the world have been lifted.

Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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