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flight prices after covid-19

What Will Happen to Flight Prices After COVID-19?

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These days, the only thing that’s certain is uncertainty. 

The coronavirus pandemic has turned the world upside down. The airline industry and travel as a whole have been pummeled. And this gut-punch came on the heels of the golden age of flight deals, when low fuel prices and airline competition generated several years of the lowest domestic and international flight prices travelers have ever seen.

In the midst of this outbreak, we’ve seen cash-hungry airlines slash prices for flights worldwide through the fall, winter, and even into the heart of summer 2021. But what about when this pandemic ends and life starts to return to normal?
 

 

What will the future bring for the new players in the game who were barely scraping by a couple of months ago? What about the empires of the skies that were breaking all-time highs on their balance sheets? And what does that all mean for the flight prices in the future? 
 

Supply and Demand

One thing is clear: Demand for travel is down.

As with all things, one of the biggest factors behind flight prices is the simple law of supply and demand. Demand is currently down, so airlines have cut the supply of flights until that demand returns. Through the spring, airlines dropped routes and cut frequencies left and right. For months, airlines were running at just 20% of their normal operations – or less. While that has slowly returned, it’s nowhere near back to normal because travel demand remains low.

As the pandemic fades and the economy (hopefully) gets moving again, that demand will rebound. But how quickly?

It won’t be overnight. It will take years for travel to return to its pre-pandemic levels. Business travel has been critical for airlines to churn out record profits, but that may never fully return as businesses permanently adopt the Zoom meetings and phone calls that have become the new normal.

As airlines gauge this recovery, they’ll slowly ramp back up the supply of flights, too. It’s a recipe for some uncertainty of what flight prices may look like on the other side of coronavirus.

Even with a fraction of the flights they had during the travel boom, airlines may struggle to fill seats. They may be eager to show investors they can fill up planes and pull in revenue. And they’ll want to convince travelers who are wary of getting back on a plane to put their doubts aside. Low fares are an easy way to do all that. 
 

flight prices after covid-19 

As the coronavirus pandemic started, we saw airlines slash fares to get more travelers on planes. It’s safe to assume they’ll do the same once it’s over. And that means we think you can count on some astonishing sales in the future.
 

Low-Cost Competition Will Drive Flight Prices After COVID-19

If supply and demand is the principle behind airfare, competition between airlines is the gamechanger.

The airline industry is cutthroat. Every year, we see new players enter and exit the game. And in the meantime, airlines are constantly targeting their competitors, offering dirt-cheap prices to undercut each other in hopes of winning more customers. The connection between competition and price is undeniable.

Low-cost airlines are a prime example.

WOW Air came out of the gates hot with some of the lowest pricing to fly between the U.S., with flights under $50 each way. Norwegian Air has made its name with low fares across the Atlantic. The list goes on.
 

flight prices after covid-19 

These budget carriers have driven flight prices to Europe down to record lows in recent years – as low as $300 round-trip or less. Sure, you can snag a cheap flight on one of these barebones airlines. But they’ve also forced major airlines like Delta, American, United, and their international partners to compete on price, too. And that’s a win for consumers.

The future of low flight prices hinges on lots of competition between airlines, especially the survival of these low-cost carriers. And they were already struggling before coronavirus.

WOW Air collapsed a year ago. Primera Air went kaput in 2018.

Norwegian has been struggling with budget problems for more than a year, and the COVID-19 pandemic has only made it worse. Long before other airlines started shrinking, Norwegian cut 4,000-plus flights and laid off much of its staff as it entered survival mode.

Some airlines have already fizzled out due to coronavirus, and more are sure to follow. Others are entering bankruptcy and an uncertain future. We can only hope that the vast majority of airlines still have a pulse when the dust settles.
 

The Price of Oil

Jet fuel is one of the biggest costs for each and every airline. It’s another huge factor in the price of travel. And earlier this year, it dropped like a rock.

In the early stages of the pandemic, the price of oil dropped to lows not seen in more than 20 years. While it bounced back closer to the norm, it’s still cheap.
 

flight prices after covid-19
Graphic courtesy of MacroTrends.net

That’s little comfort to airlines now, who aren’t flying nearly enough to capitalize on the low prices. But if these bottom-of-the-barrel oil prices hold until travel rebounds, it’s a potential catalyst that will pull down airfare with it. 
 

Bottom Line

Predicting airfare is more art than science. It can be unpredictable, given the puzzling sales we see from airlines day after day, year after year. Cash grabs, mistake fares, flash sales, and fare wars can spring up at any moment.

There are bargains to be had now for future travel. And given all these factors, we’re betting there will be even more bargains at the other end of this pandemic, too.
 

5 Responses

    • These are unprecedented times and I look forward to the unprecedented silver linings and opportunities that this environment will bring. YOLO! Thanks for the very informative articles and insights, guys! I’m a huge fan and have shared your site with many folks.

  • Been a travel agent for 50 years, and I for one, will not be boarding a plane/ship/train/bus
    for a very long time. It was my business, til the bookings stopped in February 24th.
    Low fares might help spur younger people, but older or hopefully, smarter people will want everyone on an airplane/ship/bus/train to wear a mask while underway. That’s simply not going to happen. Also, for the foreseeable future, the middle seat on airplanes should be empty–don’t know what that means for smaller carriers. NO MORE SELF SERVICE BUFFETS ANYWHERE/ANYPLACE/ANYTIME–no cruise ship, no restaurant, no wedding, no hotel, no conference should allow people to get their own food. No more sharing those ubiquitous serving utensils.
    Watching people breeze by the Purell dispensers on the last two cruises we took last year—
    even with an attendant standing there–arguing they had just washed their hands—
    will be enough to keep me and my clients from sailing. This is the saddest time ever to
    be a travel agent.

  • You make some valid points! As travel slowly rebounds, one way airlines will be able to manage and control the supply is by blocking off the middle seat. As demand for air travel goes back up, continuing to limit the supply of seats (e.g. blocking off the middle seat) means they will be able to charge more for aisle and middle seats until demand is back to normal levels. I believe the unheard of flight deals we are all currently seeing are a shorter term trend to get some people back in the air. Will be interesting to see what happens!

  • Hey there, You’ve done a fantastic job. I抣l definitely digg it and personally recommend to my friends. I am confident they will be benefited from this website.

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