A new report says airfares rose 33% in mid-February as oil prices surged, yet travel demand continues to be strong as pandemic travel restrictions diminish.
Fare data compiled by Cowen
Becker tracks 278 domestic routes across four fare products for American, Delta and United. She said the mid-February increase was driven primarily by increases in United minimum business fares, which skew towards business travelers because the fares are refundable, purchases are made within three days and they include no minimum stay.
Oil prices rose Tuesday as the crisis in Ukraine continued. May Brent crude futures hit an intraday high of $104.65. Before the Ukraine invasion, the last time oil prices traded at $100 was 2014. Prices have climbed steeply since 2020, when they averaged about $39 a barrel.
But so far, pent-up demand and easing travel restrictions seem to be influencing travel more than higher fares, driven higher by rising oil prices.
The Transportation Security Administration said that checkpoint clearances totaled 1.98 million on Monday. Clearances neared or exceeded two million for five consecutive days ending Monday.
On Tuesday, typically a slow travel day, about 1.64 million people cleared airport security.
So far, the heaviest travel day of 2022 was Feb. 18, the Friday or Presidents Day weekend, when clearances reached 2.24 million. That was the highest since Nov. 28, the Sunday following Thanksgiving, when 2.45 million people cleared security.
The International Air Traffic Association said Tuesday that it expects the global passenger count to reach four billion in 2024, exceeding the 2019 level. Four billion is 103% of the 2019 level.
Expectations are now unchanged from what was expected in November, prior to the Omicron variant.
“People want to travel (and) when travel restrictions are lifted, they return to the skies,” said Willie Walsh, IATA director general, in a prepared statement. “There is still a long way to go to reach a normal state of affairs, but the forecast for the evolution in passenger numbers gives good reason to be optimistic.
By 2021, overall travel reached 47% of 2019 levels, IATA said. This is expected to improve to 83% in 2022, 94% in 2023, 103% in 2024 and 111% in 2025.
Among world regions, IATA called Asia-Pacific “the laggard of the recovery (as) China is showing no signs of relaxing its zero-covid strategy.”
As for North America, “After a resilient 2021, traffic to/from/within North America will continue to perform strongly in 2022 as the US domestic market returns to pre-crisis trends, and with ongoing improvements in international travel,” IATA said. “In 2022, passenger numbers will reach 94% of 2019 levels, and full recovery is expected in 2023 (102%), ahead of other regions.”
IATA reiterated its call for the removal of all travel barriers, including quarantine and testing, for everyone who is fully vaccinated with a vaccine approved by the World Health Organization. For non-vaccinated travelers, IATA called for pre-departure antigen testing.