Air fares stay high as travel demand shows little signs of cracking

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Air fares in the U.S. were up 42.9% in October compared to a year ago on an unadjusted basis in a clear indication that travel demand is still strong.

On a month-to-month comparison, air fares fell 1.1% in October after rising 0.8% in September, according to data compiled by the Bureau of Transportation Statistics. October is typically a weaker month for fares with the summer travel season over.

In general, analysts expect fares to stay elevated with labor and fuel costs still high in the industry. Strong corporate travel trends are also supporting fares to help offset any slip in leisure travel with consumer discretionary spending under pressure. Looking ahead, there have been some reports that holiday leisure bookings are slightly weaker than anticipated, but also the corporate bookings for January 2023 are well above the 2022 level

The upcoming JetBlue-Spirit merger is also being watched in the context of fares. The deal will create the fifth-largest airline in the U.S. Analysts think the combination could lead to higher fares on certain routes if competition is reduced.

Watch Delta Air Lines (NYSE:DAL), Spirit Airlines (SAVE), Southwest Airlines (LUV), United Airlines (UAL), Alaska Air Group (ALK), Hawaiian Holdings (HA), American Airlines (AAL), JetBlue (JBLU), Allegiant Travel (ALGT), Mesa Airlines (MESA), SkyWest (SKYW), Sun Country Airlines (SNCY), and Frontier Group (ULCC).

Read more about the October inflation report.