Rising Fares, Low-Cost Airlines: Navigating the New Reality in the Sky

Leisure travel is back after the Omicron wave, with travel off only about 8 percent last weekend compared to the same period in 2019, according to the Transportation Security Administration’s checkpoint numbers.

As travelers make their plans for upcoming spring and summer travel, they can expect to see airfares inching up — pushed by seasonal demand, inflation and oil price spikes — while new routes are expanding as both American and foreign airlines aim to encourage a return to international travel.

The rush to travel has inspired innovation in the skies at the same time as the airline industry encounters new headwinds with the war in Ukraine. Here’s how the following developments in the air may affect your next trip.

Airfares on the rise

One sign of travel’s recovery is higher airfares, as airlines are able to charge more to growing numbers of willing fliers. According to the Consumer Price Index, airfares were up more than 12 percent in February compared to the same period in 2021, when Covid-19 vaccines were just being introduced.

At this point, those fares are more a reflection of competition for seats than the rising price of jet fuel since Russia’s invasion of Ukraine. On Feb. 24, jet fuel was $2.71 a gallon, according to the Argus U.S. Jet Fuel Index, peaking around $4.11 in early March. It is currently around $4.

Fuel accounts for about 30 percent of an airline’s operating cost, said Adit Damodaran, the economist at the flight-booking app Hopper, adding that a 10 percent rise in jet fuel normally triggers about a 3 percent increase in expenses, which are generally passed on in higher airfares. According to Hopper searches, the average domestic airfare is $330, about 7 percent above 2019 prices.

American carriers have not instituted fuel surcharges, though Delta Air Lines’ president, Glen Hauenstein, recently said fare hikes could be coming in the second quarter thanks to strong demand.

For now, most fare increases are tied to the post-Omicron boom in travel.

“Travel will likely cost more this spring and summer from pent-up demand,” said Steve Hafner, the chief executive of Kayak, the travel search site, noting that flight fares are up 21 percent for domestic travel over spring break compared to 2019. The most popular destinations are Las Vegas, Orlando, Miami, Los Angeles and Phoenix. “There are still deals to be found, but people should plan their trips soon to get them.”

For summer travel, Kayak searches found that prices are up 28 percent compared to 2019 fares for domestic travel, and 6 percent for international.

“The fact that airfares are going up does not negate the fact that we are awash in cheap flights,” said Scott Keyes, the founder of Scott’s Cheap Flights, a membership service that finds bargain flights. He added that fares began steadily declining in 2015, with increased competition from low-cost carriers and a shift by airlines to raise ancillary fees, sell frequent flier miles to credit cards, and charge more for business and first-class seats, allowing them to keep economy fares low.

While rate swings can happen daily, standard bargain-hunting advice applies, including buying tickets between one and three months in advance, traveling in the off-season, flying at off-peak times and being flexible with your dates and airports.

More international options

Well before Russia attacked Ukraine, America’s legacy airlines decided 2022 was their comeback year for flying internationally. With travel restrictions still tight across much of Asia, most of the airlines that fly internationally from the United States focused on Europe. So far, they are sticking to their resolve.

“Airlines are really anticipating a big summer for travel, especially iconic European vacations, and are adding capacity now,” Mr. Keyes said, noting that there is a 25 percent increase in available seats on flights to London from the United States this summer compared to the prepandemic summer of 2019.

United Airlines is leading the pack with what it says is its largest trans-Atlantic expansion ever, adding five new destinations, including Bergen, Norway; the Azores Islands; Amman, Jordan; Palma de Mallorca, Spain; and Tenerife in Spain’s Canary Islands. By summer, it plans to add new flights to Berlin, Dublin, Milan, Munich and Rome, and restart seven routes suspended during the pandemic, including service to Frankfurt, Nice and Zurich.

Delta Air Lines plans to operate nearly twice the number of trans-Atlantic flights this summer compared to last. New routes from Boston will reach Athens and Tel Aviv.

Collectively, U.S. airlines will be operating more than 70 routes to Europe not offered in 2019, according to Air Service One, a company that tracks route development.

These route expansions will save you time, but will they save you money? According to a recent Kayak search, a round-trip flight on United to Palma de Mallorca from Newark in June starts at $633 and takes between eight and nine hours, depending on the direction of travel. With a stop in Zurich on Swiss International Air Lines, the fare is $753 and takes a few hours longer. If you’re determined to pinch pennies, you can whittle it down to $561 by using multiple airlines and making two stops en route in both directions, at 21 hours outbound.

More capacity and route alternatives “puts downward pressure on airfares,” said George Hobica, the founder of the airfare deal site Airfarewatchdog.com. Smaller airports, he added, tend to have lower fees for things like landing rights, which helps keep costs down.

Considering the war in Ukraine, travelers planning flights to Europe should ensure they are buying tickets with no change fees, allowing them to get a voucher for a future trip should they want to postpone, which most airlines have been offering since the pandemic began.

Low-cost options grow

American carriers aren’t the only ones vying for your business. A growing number of low-cost carriers — including foreign entries — are offering new routes, new competition and bargain fares.

Most analysts think the economics of trans-Atlantic travel preclude budget carriers from succeeding on the routes, pointing to Norwegian Air Shuttle, which stopped flying trans-Atlantic routes during the pandemic, and Iceland’s Wow Air, which went bankrupt in 2019. Caveat emptor.

Nonetheless, the Iceland-based newcomer Play picks up where the defunct Wow left off, offering service to more than 20 European destinations with a stop in Reykjavik on the way. By summer, it plans to operate from Boston, Baltimore and New York Stewart International Airport in the Hudson Valley. In September, it plans to expand to Orlando.

Recently, its rate calendar showed one-way segments from New York to Dublin with a stop in Reykjavik from about $153. Expect lots of extra fees, including charges of $4 to $40 for a seat, $32 to $53 for a checked bag and in-flight food and beverage from 1 euro for water to 9 euros (or about $1.10 to $9.90) for a ham-and-cheese baguette.

“If you’re going to Iceland or looking for a cheap way to get to Europe, and you don’t care about service, that’s the way to do it,” said Brett Snyder, the founder of Cranky Flier, an aviation blog, and Cranky Concierge, a travel planning service.

Canadian ultra-low-cost carriers Swoop and Flair Airlines are also expanding at American airports.

Owned by West Jet, Canada’s second largest airline, Swoop will start service this summer to Chicago, Los Angeles, Nashville, New York and San Francisco, mainly from Toronto and Edmonton, bringing its number of U.S. destinations to 11. One-way fares start at 99 Canadian dollars (about $79), before fees.

Based in Edmonton, Flair added 17 new cross-border routes in December, reaching six U.S. destinations, including Las Vegas, Palm Springs, Phoenix and Orlando from airports in Montreal, Vancouver and others. Fares in April between New York’s Kennedy International Airport and Toronto recently started around 100 Canadian dollars one way, with fees starting at 29 dollars for a carry-on bag, 10 dollars for a seat and 29 dollars to make a penalty-free change to a ticket.

“Flair is the first ultra-low-cost carrier from Canada that’s been able to build momentum,” Mr. Snyder said.

These airlines share the drawbacks of other ultra-low-cost carriers — principally, that they fly less often, making them prone to significant passenger delays when there are weather or mechanical problems, because the next flight may be days away and they lack agreements with larger airlines to accept stranded passengers.

Two smaller American carriers that launched last year, Breeze and Avelo, are fine-tuning their operations.

Avelo, which launched with point-to-point flights on the West Coast from Burbank, Calif., recently added a new East Coast base in New Haven, Conn., with several destinations in Florida and flying as far west as Chicago. In April, the flight calendar showed one-ways between New Haven and Tampa, Fla., from $69, with seats from $6, carry-ons for $40 and checked bags from $35.

Breeze recently added 10 new cities, reaching several in Florida and the Southeast from Hartford, Conn., while adding direct service to Las Vegas from cities that didn’t have it, including Charleston, S.C., and Syracuse, N.Y. One-way fares from Syracuse to Las Vegas in June recently started at $159 with extra charges for seats and carry-ons.

Another newcomer, Aha!, from ExpressJet Airlines, aims to make Reno, Nev., its hub, offering service to about 10 cities, including Palm Springs, Calif., and Spokane, Wash. It plans to add hotel accommodations to create vacation packages.

A recent search for a round-trip fare from Eugene, Ore., to Reno started at $109, with a minimum $10 charge for a seat each way and baggage charges starting at $30.

Subscription flights

Low-cost carriers have long played with pricing. Now a more traditional carrier, Alaska Airlines, has introduced its own new approach with a subscription service called Flight Pass.

Aimed at travelers based in California, the pass starts at $49 a month and gives annual subscribers access to six round-trip flights a year that can be booked two weeks or more before departure. This brings the average cost of a round trip to about $100, which the company says is 20 to 30 percent off average fares on a yearly basis. For travelers who want more flexibility, Flight Pass Pro allows subscribers to book anytime from $199 a month, or roughly $400 per round trip.

The subscription covers flights among 13 destinations in California, plus Reno, Las Vegas and Phoenix.

The entry-level service is an attempt to attract younger travelers, such as college students, and remote workers who may not have flown Alaska Airlines, allowing them to budget for travel and pay incrementally rather than in a lump sum.

“It can be really helpful when you’re entering an established market with really strong competitors to have a reason for people to try you out,” said Alex Corey, the managing director of business development and products for Alaska Airlines.

He added that the program, which launched in mid-February, was hitting its mark; about a third of subscribers had not flown the airline in the past three years.

Elaine Glusac writes the Frugal Traveler column. Follow her on Instagram @eglusac.

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