Airfare is cooling as carriers add service for summer

Flights are getting cheaper as airlines boost service during what’s shaping up to be a busy summer.

U.S. inflation data this week showed airfares dropped 8.1% in June from a month earlier, the biggest decline in nearly a year and the second biggest since April 2020, when the Covid pandemic suddenly sapped demand for air travel.

Airlines are enjoying cheaper fuel and a lasting boom in travel. Daily airport screenings by the Transportation Security Administration have recently surpassed 2019 levels, before the pandemic.

Delta Air Lines on Thursday reported its highest-ever quarterly earnings, estimated more record revenue through the start of fall and hiked its full-year forecast.

Delta’s revenue per available seat mile, which measures how much airlines are generating for every seat they fly one mile, rose 1% in the last quarter from a year ago with capacity up 17%. It’s a sign that fares and revenue are holding up despite added service.

International fares appear to be doing better as customers opt for trips abroad, a shift from previous years when travelers favored domestic destinations during pandemic travel restrictions.

Delta’s domestic revenue unit revenues fell 1% in the quarter from the same period of 2019, but trans-Atlantic unit revenues rose 22% and the smaller trans-Pacific segment climbed 29% and Latin American service unit revenues were up 16%.

Airlines have been especially aggressive in adding record amounts of service to Europe this summer and higher unit revenues are showing that fares there continue to hold up.

United Airlines and American Airlines will provide their outlooks on demand next week when they’re scheduled to report results.