How long can airline prices stay so low?

Fares are cheaper than they have been on decades because of the pandemic.

BY KYLE ARNOLD

THE DALLAS MORNING NEWS/TNS

Traveling the country hasn’t been this cheap in decades.

For less than $100, travelers from the Dallas area can buy a roundtrip ticket to New York, Las Vegas, Orlando, Los Angeles and dozens of other major cities. Less than $200 will get airfare to El Salvador, Puerto Rico, Cancun and the U.S. Virgin Islands.

Just how long seats on airplanes will be this cheap is anyone’s guess, said airfare tracking experts. For now, plane tickets for the traditionally robust spring break weeks and beyond remain at rock-bottom prices for those willing to take the risk of traveling.

Due to the deep and painful COVID-19 pandemic, airlines are selling seats at the lowest prices in at least 25 years and an airplane ticket has never been cheaper if inflation is factored in.

The average domestic airfare out of DFW International Airport dropped to $251 in the third quarter of 2020, 35% cheaper than the year before, according to government data. Love Field tickets are selling for about $215.

For the week ending Jan. 17, planes flown by the nation’s largest airlines were still less than half full, according to trade group Airlines 4 America.

It’s one of the few perks of a global health crisis that has largely destroyed the aviation and travel industry and shaken the confidence of longtime travelers now afraid to expose themselves to the deadly coronavirus.

The picture on airfares isn’t much clearer than it was eight weeks ago or eight months ago. The price that airlines can charge for tickets is still largely dictated by a hard-to-control COVID-19 virus that is still shifting, spreading and mutating.

Once demand returns and airplanes fill up, prices will go up, too. But empty seats on airliners means cheap tickets.

Unpredictable trends

During the first two weeks of January, passengers going through Transportation Security Administration checkpoints fell 60% from a year ago, showing that the airline industry still has a long way to go to recover, even after 10 months of pandemic downturn.

“Airline pricing is always volatile compared to other products, but it became even more volatile during the pandemic,” said Scott Keyes, founder of airfare tracking website Scott’s Cheap Flights. “Airlines base their prices on past data, but there is no data you can find that accounts for what’s happening in the world.”

It’s true that travel trends have been somewhat unpredictable for airlines. Traffic has tended to surge during the holiday travel months, but dip back down to meager levels as demand weakens. Price sensitive leisure travelers are the vast majority of passengers too.

Spikes in COVID-19 cases in some regions of the country detour travel and some states are enacting new travel restrictions that can require lengthy quarantines.

Major competition

Meanwhile, there are several versions of a COVID-19 vaccine being distributed across the country, which should give at least a portion of the population the confidence to fly again.

“Airlines would love to, if they could, raise fares,” Keyes said. “But in reality, what’s going to happen if they charge too much for tickets is that customers will go to a competing airline with lower fares.”

That’s one reason ultra-low-cost carriers such as Spirit and Allegiant have performed better financially than larger competitors that historically focused on a mix of business, international and budget travelers.

Airline fare calendars show just how far off a price recovery is.

Pent-up demand

Airlines have given up hope for a robust recovery by spring break and are now pinning hopes on summer, Keyes said.

“There is a lot of pent-up demand for travel,” Keyes said. “They’ve been wanting to travel since last March but haven’t been able to do it.”

Plano travel agent Sudeep Shah, owner of Travel King, said airfares to places such as Asia are higher now, but still historically low. He said there are flights from North Texas to India that are selling for $3,100 or less.

There are also wealthier customers putting money down on flights and vacation packages because they know they can reschedule later.

“Some people are even booking cruises because they know that if it gets canceled, they can just take a cruise later,” Shah said.

Drops in Florida

Warm weather and outdoor destinations are seeing some of the best deals and drawing the most attention from travelers.

Tickets in and out of Miami are down 61% from last year and other cities with the biggest price drops include Tampa, Charlotte, Mexico City and St. Thomas in the U.S. Virgin Islands, according to Kayak.com.

“Consumer interest in flights will bounce back first which we’ve already started to see happen gradually,’’ said Kayak.com spokeswoman Kayla Inserra. “But we don’t expect bookings to recover until airlines fully restore the capacity for business travel, in line with travel recovery trends more broadly. That may not happen until 2023.”

It won’t last

Eventually, prices will have to go up.

Delta Air Lines, which led the industry in profits before the pandemic, said it was losing about $12 million a day in January and hopes to be profitable by mid-summer, but even that is dependent on a vaccine immunizing large portions of the population.

“And as the year progresses, we expect demand will start to accelerate as vaccinations become more widespread and the virus is in a contained state, and customers gain greater confidence to make future travel commitments,” Delta CEO Ed Bastian said in a call with investors and reporters Jan. 14.

Until airlines are able to bring passenger traffic levels up to support their fleets, employee numbers and other overhead costs, they’ll likely have to keep prices low to attract travelers.

“I think this will be a low-fare environment for some time coming out of this pandemic,” said Southwest Airlines chief operating officer Mike Van de Ven.