SAVE - Air fares drop sharply again in latest inflation reading

2023-08-10 11:57:44 ET

Airline fares in the U.S. fell 18.6% in July compared to a year ago on an unadjusted basis. Overall, core inflation cooled to a 4.7% year-over-year pace during the month.

On a month-to-month comparison, air fares fell 8.1% in July after declining 8.1% in June, dropping 3.0% in May, and decreasing 3.0% in April, according to data compiled by the Bureau of Transportation Statistics.

Analysts said the downward trend in fares is due largely to lower fuel prices and a healthier overall cost basis for carriers. The latest tracking indicates that booking demand remains strong, particularly with corporate and international channels still recovering from the pandemic slowdown.

Some airline companies, such as Southwest Airlines ( LUV ), have been running fare specials in order to get ahead of any consumer discretionary spending pullback surprises and lock in fall bookings.

Southwest Airlines earnings call ( Southwest Airlines Co. ( LUV ) Q2 2023 Earnings Call Transcript): "We had an all-time record fare sale in June for our fall travel. We had top 10 booking days during that fare sale and including our all-time record for bookings taken in a single day. And that compares to -- even when we open up schedules for the summer or for the holidays, we took more bookings for the fall during the fare sale than we have any other day in our history. So, we’ve got a tremendous base of bookings in place for the fall."

U.S. airline stocks: Delta Air Lines ( DAL ), Spirit Airlines ( 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 ).

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