The Bureau of Labor Statistics’ Consumer Price Index released Wednesday shows that the price of airfare and car rentals have decreased.
By Michael Cappetta
It’s been called “revenge travel” or “rebound travel” — but most travelers are calling it what it is: a period of sky-high prices on nearly every part of a journey.
However, the Bureau of Labor Statistics’ Consumer Price Index released Wednesday shares some comforting news that costs of airfares and rental cars are decreasing — as much double digit drops in prices. The most significant drop is airline tickets, with prices dropping a whopping 18.9 percent from last June, and eight percent drop over the last month.
“Consumer prices tied to travel were broadly weak in June, with everything from airfares to the cost of rental vehicles and lodging away from home falling over the month. The eight percent drop in airfares was notable, and odds are there will be further softness in airfares due to past declines in jet fuel costs, a fading of post-pandemic ‘revenge travel,’ and domestic airline capacity back above 2019 levels,” Bernard Yaros of Moody’s Analytics Economist said in a statement to Travel + Leisure.
An additional expert also explain that data is partially due to more travelers choosing to fly during very specific periods such as holiday weekends, and not spread out over the course of many months,
“Travel has been heavily concentrated during spring break and Fourth of July, in which we saw as record-setting with TSA screenings. A lot of the travel we are seeing is traveling abroad instead of domestically,” KPMG’s Chief Economist Diane Swonk explained to T+L.
Swonk noted that in 2022, there was such a backlog of demand for travel that it was high traffic spread out for several months, whereas now the seasonal schedule has settled in to help bring prices down during off-peak periods.
For travelers looking to take a late-summer road trip, car rental prices have dropped by 12.4 percent over the last year. She specifically points out that as used car prices have dropped, and more new cars are available for sale due to solutions in the supply chain, rental car companies have been able to expand their fleet size.
“For car rental prices, which had gone to unseen levels, they are now settling into some type of normal,” Swonk explained. “We’re seeing the easing of demand in the used car market, which helps increase the inventory for car rental companies to buy a new fleet of cars.”
One area of the report that still reveals the ongoing high costs: hotels. Lodging away from home, including hotels and motels, is up five percent over the last year.
While travel prices have been a roller coaster of highs and lows over the last several years, both economists and industry executives don’t expect the demand for travel to slow down as the industry transitions from the busy summer travel season to the fall.
“We’ll see some seasonality, there’s no question, as kids go back to school, especially in the Northeast,” Delta Air Lines’ CEO Ed Bastian said in an interview with CNBC on Thursday.“But I think it’s going to be more of the same. The international business is going to continue, what we can tell, stay really strong. It’s going to be a long summer to Europe, we’re going to fly the summer schedule longer than we’ve ever flown.”
Bastian also said that he expects corporate demand for business travel to pickup in the fall as more employees return to offices, and that hybrid work has turned every weekend into a long weekend as employees blend business and leisure travel.
“The biggest issue we are seeing is a shifting preference of who is traveling, as foreign travel is more expensive, and also we’ve seen these patterns before and we hope the deceleration [of prices] continues,” Swonk said. “That’s what the Fed is trying to achieve, but I’m cautious of how this will stick.”