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Whether planning necessary travel in the near term or fantasizing about vacationing in the ever-longer term, you might be curious how the coronavirus pandemic has affected airfare prices.
We compared data from our points and miles valuations analysis to determine where and how airfare has changed since this time last year. We looked at the same routes, airlines and booking time frames for both 2019 and 2020, ensuring an apples-to-apples comparison.
Although air travel has picked up significantly since the lows in April, the Transportation Security Administration is still reporting about 63% fewer daily screenings than this time last year. Has this drop in air travel demand led to a significant price drop?
The short answer is: Yes, prices have fallen.
Prices have dropped, but mostly in the short term
The average cost of a domestic round-trip ticket fell 23% in 2020, from $277 in 2019 to $214.
This price drop is striking but not surprising given continued low demand. But the trend becomes stronger when breaking out the booking date data, with those made within 15 days dropping much further than bookings made six months in advance.
The plot thickens.
Airfare for long-term bookings has remained flat year over year. If you book a flight for six months from now, you’re likely to pay roughly the same price as you would have last year. But closer-in bookings, within 15 days, are not only far cheaper than they were in 2019 but also cheaper than long-term bookings.
This turns conventional airfare-booking wisdom on its head. Usually, we would recommend booking flights as far ahead as possible to secure low fares. But booking too far in advance is now a recipe for getting fleeced.
What’s going on?
The management of supply and pricing is usually an exquisitely orchestrated dance in which airlines ensure that every flight is filled to near capacity and every price is competitive. This usually means ramping up prices for nearly full flights at the last minute, when competition becomes stiffer.
However, now that demand has dropped and airlines are actually falling over themselves to reduce flight capacity, the game has changed. Airlines are now competing with each other for last-minute bookings, which drives down prices. And they seem to be making up revenue by raising prices on longer-term bookings made by those few brave souls willing to plan in advance. In other words, it’s a buyer’s market for close-in bookings.
Of course, these pricing dynamics, like everything this year, are liable to change by the week. If you're thinking about booking a particular route, set up a price alert on Google Flights or another travel search tool and keep an eye on how the airfare winds are blowing.
What do these unusual airfare trends mean for you? Keep it simple: Avoid booking months in advance, set up a price alert and try to shed the normal (and normally smart) habit of avoiding last-minute bookings.
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