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CPI Report Live Updates: Inflation Declines to 3.2% in October

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Airfares to many popular destinations have recently fallen to their lowest levels in months, and even vacation travel is far cheaper than last year, providing welcome relief to consumers frustrated for months by high prices of all kinds of goods and services. .

The glut of transactions suggests that the airline industry’s supercharged recovery from the pandemic may finally slow as the supply of tickets catches up and, on some routes, outpaces demand, which appears relatively robust.

Consider the rates that Denise Diorio, a retired teacher from Tampa, Florida, recently got. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month- this.

“I told all my friends, ‘If you want to go somewhere, buy your tickets now,'” she said.

The deals she found may be exceptional, but Ms. Diorio is right that deals abound.

At the start of the month, the average price of a domestic flight around Thanksgiving was down about 9% compared to last year. And flights around Christmas were about 18% cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates during the holidays and found that domestic flight prices were down about 18% around Thanksgiving and 23% around Christmas.

“In many cases, we’re seeing some of the lowest fares we’ve seen since travel began coming back after the drop in 2020,” said Kyle Potter, editor-in-chief of Thrifty Traveler, a travel and service blog. transaction monitoring.

Domestic ticket prices fell over the summer, Potter said, and deals on international travel, particularly to Europe, have become more common recently.

Airlines lower prices when they try to get more people to book tickets because demand slows or when they face tougher competition. There’s no doubt that competition has intensified on some routes, but travel experts say it’s unclear whether demand is waning.

This year’s Thanksgiving is expected to set a record for air travel, with nearly 30 million passengers expected, according to Airlines for America, an industry group. This would be about 9% more than last year and 6% more than in 2019, before the pandemic.

But some airlines say demand slows outside of holidays and other peak periods. Additionally, some airports have been so inundated with flights that carriers have been forced to cut fares to fill planes.

This hasn’t been much of a problem for most of the pandemic recovery. Weather and other disruptions limited flight supply last year and in 2021, as did shortages of trained pilots, parts and aircraft, among other factors. This drove up ticket prices, kept planes full and helped airlines turn healthy profits.

This year’s Thanksgiving is expected to set a record for air travel, with nearly 30 million passengers expected.Credit…Stefani Reynolds for the New York Times

“The airline industry has never generated the types of profit margins and returns on capital that it has achieved over the last two and a half years,” said John Grant, chief analyst at OAG, a aviation advice and data. “We’re getting back to a more normal industry.”

For the largest American airlines, the favorable situation continues, fueled in particular by a thriving demand for international travel. But small, low-cost carriers began to suffer. Many reported disappointing financial results for the three months ended in September. Executives at those airlines said demand was weakening, fares were falling and costs remained high. They also say bad weather and a shortage of air traffic controllers have made flights more difficult.

JetBlue Airways, for example, lost $153 million in the third quarter, compared to a profit of $57 million for the same period last year. The company recently said it was shifting its flights away from busy markets, like New York, to those where it expected to perform better, like the Caribbean. Budget airlines Spirit Airlines and Frontier Airlines recently told investors they were looking to cut costs by tens of millions of dollars.

Competition has been fierce in some major markets, driving down prices and profits.

In Denver, where Frontier is based, about 14% more seats were available on flights this summer compared to summer 2019, according to Cirium, an aviation data provider. Miami and Orlando, Florida, two popular destinations served by many low-cost carriers, saw capacity increase even more.

But while airlines have added flights in popular markets to chase away passengers, airports in other cities, including Los Angeles, the hub of several major airlines, have seen significant capacity declines from the summer 2019.

“You’ll find there’s a strong correlation between airlines that are doing well and airlines that are struggling, margin-wise, when you compare where their concentrations are,” Barry Biffle, Frontier’s chief executive, said. at a conference last month. call to discuss the airline’s third quarter results.

When it comes to international routes, analysts are less sure about the reason for dropping fares and keeping them low. The type of deals Ms. Diorio got for her trip to Paris could mean that major airlines will soon find themselves facing financial difficulties or simply that the industry will return to a pre-pandemic normal.

“Historically, demand to Europe decreases in the winter,” said Steve Hafner, chief executive of Kayak. “So I think that reflects normal trends.”

But international travel demand could face challenges, partly because of wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than they were over the past two years, when they had pandemic-related savings. Although demand remains strong, airlines risk offering too many seats on popular foreign routes.

Whatever the cause of the recent drop in fares, these deals provide a welcome break for travelers after years of high prices, Mr. Potter said.

“Either way, the recipe is there for cheap flights,” he said. “If it’s just a bit of overcapacity, it’s a win for consumers. If the demand for travel goes down, in some way, that’s an even bigger victory for people who will never give up on travel.

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