A Frontier Airlines plane taxis past a Spirit Airlines plane at Indianapolis International Airport in Indianapolis, Indiana.
Luke Charette Bloomberg | Getty Images
FORT WORTH, Texas — Airlines have a record 260 million seats available this quarter, and to do so, they’re offering fares roughly equivalent to a pair of movie tickets.
southwest airlinesFor example, last month we offered one-way fares for $29 for early morning or overnight flights, just one example of airline discounts during off-peak periods.
“I would say the amount of discounts and sales we’re doing today is a little bit higher than normal,” Ryan Green, Southwest Airlines’ chief commercial officer, told reporters at the Skift Aviation Forum earlier this month. ” he said. He said the industry’s increased capacity in recent months meant more seats could be filled, even though airlines’ average fares had risen in recent months. . quarter From 1 year ago.
Meanwhile, after years of fluctuations in demand due to the pandemic, leisure travelers are largely returning to traditional booking patterns, and airlines are finding ways to fill planes outside of vacation and other popular travel periods. ing.
“Typically, prices increase incrementally every seven days before a flight,” says Scott Keyes, founder of Scotts Cheap Flights, a ticket trading company that recently rebranded as Going. But he said airlines are either cutting last-minute fares or not raising them as much as they normally would.
According to aviation data firm Cirium, airlines are planning a record 259.8 million seats on domestic flights in the fourth quarter (up nearly 8% from the previous year) and 1.86 million flights (up 6% from 2022). ing.
Getting the off-season balance right is a challenge for airlines, which generate the bulk of their revenue in the second and third quarters during the busy spring and summer seasons. Most major airlines reported record revenues and strong demand during this period, with some executives reporting higher growth on international flights than on domestic flights.
Fall in freight rates
jet blue airlines It said average fares fell more than 12% to $201.73 in the same third quarter of 2022.
low cost airlines spirit airlines The airline said fares were down about 28% year-over-year to $48.73, but non-ticket revenue, which includes additional charges such as seat selection fees and checked baggage, rose 1% to $67.70.
Florida’s Miramar Air, which JetBlue is acquiring, warned of pre-Thanksgiving fare discounts, saying, “Unfortunately, we do not yet see a return to a normal demand and price environment during the anticipated peak holiday period.” ” he said.
ultra discount friends frontier airlines The average fare last quarter was just over $39, down 32% from a year ago, the company said.
All three airlines are projecting losses for the past three months. Year.
Rethinking capacity
Reduced off-peak pricing power is forcing airlines to rethink where they deploy their aircraft.
“Capacity is the most valuable commodity needed to generate revenue, and that capacity must be deployed as efficiently as possible relative to demand,” Jordan said at the Skift Aviation Forum. .
Jordan said the airline plans to fly fewer flights on non-peak days, such as Tuesdays, compared to periods of high demand, a move that prioritizes crew time and allows for more flights during busy times.
Frontier Airlines CEO Barry Biffle told CNBC that one thing the airline is trying to change is finding less crowded markets for its flights.
“We are focused on growth away from saturated markets,” he said. “We won’t shrink in Orlando and Las Vegas, but we probably won’t grow either.”
Holiday demand remains strong
As demand changes, eye-catching double-digit fares emerge.
However, these are usually expected to run out quickly and will almost certainly not be available during peak holiday periods, with demand expected to be at or near record highs.
delta airlines predicts passenger numbers will be between 6.2 million and 6.4 million during the Thanksgiving period, from Nov. 17 to Nov. 28, compared to 5.7 million last year and 6.25 million in 2019. He said he was a person. united airlines said it expects to carry 5.9 million passengers from Nov. 17 to Nov. 29, an increase of 13% from last year and 5% from 2019. american airlines forecasts a record 7.8 million travelers from November 16th to November 28th, exceeding last year’s 7 million and increasing the number of customers in 2019 to about 200,000. exceeds.
Southwest CEO Jordan said holiday bookings are outpacing last year.
Airline tracking company Hopper said “value” domestic fares, which it defines as the bottom 10th percentile of available fares, averaged $248 on Thanksgiving, down from $271 last year and $276 in 2019. Stated.
Will it last?
Airlines are currently scrutinizing their 2024 schedules to make the most of their fleets in the face of rising costs such as fuel and labor costs. A pinched margin.
“We’re seeing airlines setting fares similar to ours, but what we really need to think about is whether they’re permanent or not,” Frontier CEO Biffle said, citing cost. “It’s not,” he said, citing cost.
Airlines are becoming more sophisticated in responding to changing demand patterns and may reduce flights and capacity during periods of travel slowdown.
Henry Harteveldt, founder of travel industry consulting firm Atmosphere Research Group, said fares are likely to be stable next year, but it’s too early to tell what promotional fares will look like. .
“If inflation really continues to be as bad as it has been and hiring softens, airlines may feel the need to invest in more promotions,” he said.
One of the benefits of full-service airlines is the variety of fares and products they can offer, from no-frills basic economy to first-class Harteveldt. This means it can increase its inventory of cheaper basic economy fares during periods of low demand, and raise fares when demand for premium seats is high.
Airlines “have the most sophisticated cash registers of any industry,” he said.
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