Scott's Cheap Flights Average airfare is going up. It won’t matter for your next flight.

From: Scott's Cheap Flights - Monday Mar 21, 2022 01:32 pm

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Last month, average airfare in the US went up 5.2%, the third largest one-month jump since 1999.

Is this the end? Are we going to have to become Scott’s Expensive Flights?

Just like last week’s discussion of jet fuel prices, I’m here to reassure you: the Golden Age of Cheap Flights is not over.

In fact, one of my predictions for 2022 was that average fares will rise at least 10%, but that it will have little bearing on what you’ll pay for your next flight.

Here’s why:

❌ Rates vs. Levels

Consider these three facts about current average fares (all adjusted for inflation):

Over the past year, they’re up 12%
Over the past two years, they’re down 23%
Over the past ten years, they’re down 40%

Are flights today getting more expensive? Less expensive? It depends! Rates are going up, levels are way down, and everyone is right.

But really, levels are what’s important. Levels are how much you pay the airline for your ticket. And the long-term level of airfare is way down, not just because of the pandemic but for years leading up to the pandemic.

🦄 There are no average fares

Imagine a Christmas flight that has just two prices available for tickets: $300 and $900 in September, then $400 and $600 in October.

October is cheaper on average, but who cares? September is cheaper for what you would actually pay.

This is the first problem with average fares: when the person sitting next to you overpaid for their ticket, that pushes up the average fare but doesn’t change anything about what you paid.

Average fares are interesting from an academic perspective, but they tell you almost nothing about what you can expect to pay for your next flight.

That’s because of one immutable fact: you can't book average fares. You can only book *available* fares.

The question is less “are average fares going up or down?” and more “are cheap flights still popping up?”

👍 Will cheap flights continue?

Yes. The Golden Age of Cheap Flights will live on.

How do I know?

First, analysts have been predicting the death of cheap flights for years.

2022: Airfare is about to get much more expensive, experts say.
2021: It’s not your imagination. Rising airfares and hotel rates are making vacations more expensive
2020: Why flying is about to get a lot more expensive — for good
2019: As the 737 Max Stays Grounded, Holiday Travel May Get More Expensive
2018: Why Are Cheap Flights So Hard to Find?

Ask yourself: despite the warnings, have you been able to get a cheap flight over the past 5 years?

In fact, here’s a simple demonstration of how, even as average fares bob up and down, cheap flights persist.

The reason for cheap flights’ permanence is that the airline business model has changed. In short, airlines used to rely primarily on economy airfare to make money. Nowadays, airlines make the majority of their revenue on things other than economy airfare—things like expensive business and first class seats, selling frequent flyer miles and credit cards, corporate contracts, cargo, ancillary fees, and more.

As a result, they’re less reliant on economy airfare, and can compete with budget carriers who pull down ticket prices industry-wide.

Look at it this way: Over the past two weeks, amid global turmoil and rocketing oil prices, many analysts predicted it was the end of cheap flights. And yet, over the past two weeks, we’ve directed Scott’s Cheap Flights members to deals like:

Long live cheap flights.

Love, Scott

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Scott's Cheap Flights Average airfare is going up. It won’t matter for your next flight.