The demand for travel has gradually but steadily recovered throughout the pandemic. It kept growing despite not quite returning to normal as vaccination rates rose and COVID-19 cases decreased.
But after the Omicron wave in the winter and once more as summer 2022 approached, something changed. The demand for travel is increasing faster than airlines can accommodate it, reaching levels unseen since before the pandemic.
What Causes Flights To Cost So Much?
Higher Demand Leads To Fewer Cheap Flights
First off, bear in mind that flight costs are governed by the same supply and demand principles that apply to all other goods.
Airlines are aware that they can charge more when more people want to fly, even on specific routes. Airlines must lower prices to increase sales when the reverse is true and fewer travelers are looking for tickets.
While the pandemic may be the situation that comes to mind when you think of low demand, there are other factors that can influence whether or not people want to travel. Numerous factors, including the climate, the time of year, natural disasters, major events, and more, maybe to blame.
Forget about pandemics; there are a lot more common factors that affect demand in the travel sector, such as the season.
Travel costs, for example, are always double, triple, or even more than they are during other times of the year.
Remember to take into account the seasonality at your destination, even if it does not directly affect you.
Even if you aren’t going for the cherry blossoms, the high costs of cherry blossom season will unavoidably have an impact on you if you can only find time off work in March and decide to fly to Japan to visit Disneyland Tokyo.
On the other hand, if you can only travel to Ibiza in the winter, you’ll benefit from the best discounts of the year.
Staffing Shortages
Despite the fact that more people want to fly than ever before, the airline industry as a whole is still operating with a staff that has been reduced due to the pandemic. According to Scott’s Cheap Flights, there are 15 to 20% fewer flights than are actually required. In order to prevent disastrous mass cancellations and delays brought on by bad weather and staffing issues, flights were reduced from the usual summer schedule. Before the pandemic, the pilot shortage in the United States was unmanageable. There is currently a shortage of trained workers, and experts predict it will take years to eliminate it.
Historic Refinery Margins
The refinery magins are one alarming indicator in the market data. The value that the refining process adds is represented by this price. A rise in price has followed the surge in demand for refined goods, which is higher than average. According to Shell, after Q2 2022 came refinery margins were $28.04/bbl, more than double the rate of $10.23/bbl from Q1 and seven times higher than Q2 2021.
This implies that in addition to other costs associated with labor, production, and transportation, this price must be added to the total cost of the barrel. As a result, the price of airfare, gasoline, diesel, and other refined products will likely increase if margins increase as well as the costs of the latter two.
In addition, high prices are being caused by a dearth of supply in the market in the United States where oil refineries shut down due to the pandemic. Marathon Petroleum Corp., the biggest refiner in the US, has seen its stock price decline this year despite having increased by more than 28% since January. Due to the effects that high fuel prices are having on the market, businesses are making money while citizens are finding it difficult to keep up with inflation.
Jet Fuel Prices Impact Ticket Prices
Well, I apologize if you are sick of reading about how expensive gas is in the news. Unfortunately, it’s a problem that goes far beyond your weekly fill-up and is a major factor in higher plane ticket prices.
Hedging is a technique used by airlines to help them negotiate better prices for jet fuel, but it is not a foolproof defense against the curse of volatile oil prices. There isn’t really a good way to get around it, but higher fuel costs result in higher ticket prices.
Jet fuel costs have gone up for a number of reasons, but they have started to come down since their peak in June. As nations impose trade restrictions on Russian oil, the conflict in Ukraine has had a knock-on effect on gas prices. Demand also causes a problem. Oil supplies that are currently on hand are under pressure due to the pandemic’s lower-than-expected demand that abruptly increased once restrictions began to lift.
Will Airfares Decrease?
Good news: Decreases in flight costs have already been noticed. According to The New York Times, fares fell 7.8 percent in Given that summer travel is almost over, these trends between July and June are anticipated to persist. Prices are anticipated to average $286 this month, down 25% from May, according to Hopper’s third-quarter travel index. Prices are expected to continue to decline once the fall and winter (aside from the holiday season) arrive.
When Will Airfares Reduce?
It depends on your destination. Cheap flights may still be available in some cases.
In other words, low-cost flights won’t disappear anytime soon. Airlines cut their prices to entice more passengers to board flights when the pandemic first disrupted travel. At the moment, demand is rebounding, but many major airlines’ capacity is also slowly returning to normal.
In other words, even if there is an overall increase in average fares that makes finding low prices more difficult, we believe you can still expect some significant sales in the near future. While less common, there are still affordable offers available.
How Far Ahead Of Time Should I Make My Flight Reservations In 2022?
Generally speaking, the best time to book is six weeks to four months prior to departure. However, depending on where you’re trying to go, this information may change. For instance, 10 months in advance is typically when tickets to Asia are least expensive, so the earlier you book, the better. However, even a month prior to departure, it is possible to find inexpensive flights to the Caribbean, Central America, and South America.
Even though looking for great flight deals may sound like a full-time job, it might be worthwhile if you can save a sizable sum of money.
Conclusion
It’s more art than science to try and forecast when airline ticket prices will increase or decrease. Given the mysterious airline sales we observe day in and day out, year in and year out, it can be unpredictable. You never know when a fare war, cash grab, or mistake fare will appear.
For upcoming travel, there are still deals to be had right now. We remain optimistic about the future of low-cost travel as we all take to the skies again in 2022, despite some price increases and impending cautionary signs.
