ULCC - Air fares come down in latest inflation report after torrid pace tested consumers

Air fares in the U.S. were up 27.7% in July compared to a year ago on an unadjusted basis to mark a deceleration from the pace a month ago.

On a month-to-month comparison, air fares fell 7.8% in July after dropping 1.8% in June, according to data compiled by the Bureau of Transportation Statistics. The drop in fares could factor into Q3 and Q4 earnings estimates for certain carriers if it persists and goes beyond seasonal variations.

In general, analysts expect fares to stay elevated due to higher fuel costs and ongoing staffing pressure. Some airline have also tightened up capacity, which will support pricing.

The upcoming JetBlue-Spirit merger is also being watched in the context of fares. The deal will create the fifth largest airline in the U.S. Analysts think the combination could lead to higher fares on certain routes if competition is reduced.

Watch Spirit Airlines ( NYSE: SAVE ), Southwest Airlines ( LUV ), United Airlines ( UAL ), Alaska Air Group ( ALK ), Hawaiian Holdings ( HA ), American Airlines ( AAL ), JetBlue ( JBLU ), Allegiant Travel ( ALGT ), Mesa Airlines ( MESA ), SkyWest ( SKYW ), Sun Country Airlines ( SNCY ), and Frontier Group ( ULCC ).

Read more about the July inflation report.

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