It’s only February, but the signs are already clear: it’s going to be another summer with game-changing travel demand.
What’s less clear is what travelers can expect to pay this year.
Airfares soared in 2022 and 2023 as countries reopened for the first time since the coronavirus pandemic began and as Americans indulged in “revenge travel,” dipping into savings and setting aside free time to spend on postponed trips. During that time, airfares rose from pandemic lows to record highs.
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Europe in particular saw an explosion in demand from the US, with rates also rising.
As we head into another busy travel season, one big question remains whether demand for travel will normalize or whether what we used to call revenge travel is actually the new normal.
Opinions are divided on that front.
Towards the end of last year, some analysts began to wonder whether airlines had overcommitted to the transatlantic market and added too many seats to meet revenge travel-era demand. That would mean supply would exceed demand, which could result in lower fares (bad news for the airlines, but a welcome relief for consumers).
“We are concerned about the substantial increases we see in international capacity between the US and Europe for summer 2024,” TD Cowen analyst Helane Becker wrote in a Nov. 30 research note. “We believe that a situation of overcapacity is developing in the North. That’s probably the Atlantic Ocean [to] lead to lower airfares.”
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“We continue to believe that airfares for the North Atlantic in Q2 23 are not sustainable,” Becker added. “We believe capacity will be absorbed in July and August, but at lower airfares than what we saw in 2023.”
However, airline executives rejected the idea.
“I think demand has normalized,” United Airlines CEO Scott Kirby told TPG in December. “This is the new normal.”
United executives echoed this sentiment during the airline’s fourth-quarter earnings call in January.
“Bookings and returns for transatlantic flying in early 2024 are also strong, and we expect these trends to continue in the second and third quarters,” said Chief Commercial Officer Andrew Nocella. “We remain focused on slow growth across the Atlantic for 2024.”
“We expect a very strong summer across the Atlantic,” he added. “Our capacity is not growing materially, and we think this will really allow us to bring all the capacity we’ve added over the last few years to maturity and incredible and solid profitability in 2024.”
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“We have a pretty good view of early bookings for the summer transatlantic season, and we have higher booked load factors, as well as higher revenues,” Delta Air Lines CEO Ed Bastian said during his airline’s investor call. “So those are the two things we’re looking forward to, and both point quite positively for the transatlantic.”
Notably, most of that demand so far has been led by Americans traveling abroad, rather than Europeans traveling to the U.S., Nocella said. For United, inbound traffic had not yet fully recovered to pre-pandemic levels.
“If the profile of inbound customers starts to recover, I think this will only be more positive going forward,” he said. “It hasn’t happened consistently around the world yet, but we’ll see what 2024 brings.”
It is still a bit too early to say with certainty what actual demand – and therefore also the rates – will look like for the summer. Americans tend to book trips closer to the actual travel date than before the pandemic. For example, Bastian noted that given the tighter booking curve, the airline was more focused on the spring break outlook. Delta President Glen Hauenstein added that about 40% of seats across the Atlantic have been booked for April so far.
Still, early signs indicate that transatlantic demand will be robust – possibly stronger than last year.
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Data from the Airlines Reporting Corporation, a transaction and ticket processing service, shows that demand for transatlantic travel this summer is significantly higher than at this point last year.
Between December and January, customers bought tickets for around 13% more summer flights to Europe’s top destinations: London; Rome; Paris; Athens, Greece; Dublin; Barcelona; and Amsterdam – compared to the same period a year ago.
According to ARC, the average rate paid to date has increased by 4%.
Data from travel booking service Hopper, on the other hand, shows that air tickets to Europe for the summer months have fallen slightly compared to last year. Prices averaged $918 round-trip for flights from the US to Europe between May and September, a 5% decline from 2023, according to Hayley Berg, Hopper’s chief economist.
The two companies look at different data, which explains the discrepancy, but in both cases it’s worth noting that generally the cheapest fares are booked the earliest, meaning the average booked fare is likely to rise as the summer progresses. closer.
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It’s also worth noting that prices will likely vary by location. London, for example, has had 26% more bookings at this point in the year compared to last year, according to ARC data, but all the capacity serving the city means fares are actually down 1%.
Barcelona, on the other hand, has seen a 24% increase in bookings and rates are up 13% year to date.
Regardless of where exactly fares go, it’s clear that demand will once again be high, meaning if you’re planning to travel this summer, it could be worth making plans and booking flights earlier.
TPG has tools to help you find the cheapest flight deals and save money on hotels – or use points and miles to cover your biggest expenses. Be sure to keep an eye on the site for the latest offers.
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