Fewer people are flying as airfare soars. Here's why airlines aren't worried
Airlines are reporting fewer people flew in the third quarter as airfare surged on fuel costs, but executives say travelers are mostly swallowing higher fares.
TL;DR
- The number of people screened at U.S. checkpoints is on track for its first annual decline since 2020.
- Major U.S. carriers are prioritizing yield (higher fares) over load factor (full planes).
- Airfare has increased significantly due to a spike in jet fuel prices, with fares up over 22% from a year earlier.
- Southwest Airlines saw its average fare increase by nearly $50, despite a 3.2% drop in revenue passengers.
- Jet fuel prices are more than double year-ago levels, prompting airlines to recover costs through higher fares.
- Demand for profitable premium cabins, like business class, remains strong.
- United Airlines saw a 2.4% increase in passengers and a 16% rise in unit revenue.
- Most airlines expect fuel costs to remain high and are confident in their pricing power.
- Profit forecasts for 2026 were cut by American, United, Delta, and Southwest.
- Reduced capacity and fewer available seats are expected to keep fares elevated.
- The demise of Spirit Airlines may have caused some customers to stop flying.