Consumer Airfare Index Report - May 2021

As travel demand returns and more Americans are vaccinated, what does it mean for airfare prices?

Adit Damodaran - May. 18, 2021

Summary


Airfare Pricing Trends:

  • Current Airfare Prices: A good deal for a round-trip domestic flight is $280, and $750 for a round-trip international flight. 

  • Domestic: We’re expecting round-trip domestic airfare to climb 4% in May after already rising 12% since April, totaling a 16% increase heading into the summer. Airfare should peak in late June before the July 4th holiday at $293. From there, it should fall ~$30 heading into September, before rising 10% into October prior to fall and Thanksgiving travel. We estimate Summer 2021 (June-August) will average $283 for domestic airfare, up 35% from Summer 2020 ($209), but down 4% from Summer 2019 ($296). 

  • International: Having risen 8% since April, we’re forecasting round-trip international airfare to rise an additional 3% into June to peak at $800 by late June. From there, we’re predicting it to fall 6% (~$47) into August and hold steady into September. We estimate Summer 2021 (June-August) will average $775 for international airfare, up 3% from Summer 2020 ($755), but down 9% from Summer 2019 ($853). 

Do international destinations reopening lead to price spikes?

  • As travel restrictions are eased, carriers are able to operate increased capacity to the re-opened destination. Amid piecemeal easing of travel restrictions, unless demand spikes rapidly enough to outpace the increase in supply, flash sales can be found as airlines attempt to entice travelers to return. Iceland is a great example. Iceland fully reopened to all vaccinated travelers (including U.S. travelers) on March 17th, after which it saw a 93% spike in searches -- the biggest one we’ve seen to-date in 2021 for reopening international search traffic from the U.S. But since March 17th, round-trip airfare from the U.S. has dropped from $697 to $550, a 21% decrease. 

  • That being said we do expect broader re-openings, like that of the EU, to lead to a rise in airfare, especially heading into the peak summer travel season (June-July). Across Europe as a whole, airfare is up 17% already since the beginning of May, currently at $880 round-trip on average.

Where are Travelers Going?

Trending Searches (What’s rising the quickest in search interest?)

  • Domestic: Santa Fe (#1), Portland (#2), Rapid City (#3), San Luis Obispo (#4) topped our domestic trending destination list. These smaller-to-mid-size cities are seeing strong renewed leisure travel interest, especially given how outdoor oriented they are. All four are a three hours drive away from a national park, and three have seen new or restored service from carriers in the past month. Philadelphia (#5), New York City (#6), Chicago (#7), and San Jose (#8) were close behind. Big cities have rarely appeared on our trending destinations radar in recent months, and this perhaps indicates travelers are finally beginning to feel more comfortable about spending time in a major metro. 

  • International: Dubrovnik, Croatia (#1), Reykjavik, Iceland (#2), and Abu Dhabi (#3) were the highest trending international destinations, suggesting U.S. travelers are interested in venturing beyond Mexico and the Caribbean when they get the chance. Croatia and Iceland recently waived quarantine and testing requirements for fully vaccinated foreign travelers on April 2nd and March 17th respectively. 

Most Popular Searches (Where are most people thinking of going?)

  • Domestic: Las Vegas (#1), Denver (#2), and Miami (#3) topped the most popular destinations in searches for domestic summer flights. 

  • International: San Juan, Puerto Rico (#1), Cancun, Mexico (#2), and Mexico City, Mexico (#3) topped the most popular destinations in searches for international summer flights. Mexico, Central America, and the Caribbean continued to dominate this list with 10 of the Top 20 spots. European destinations such as London (#4), Paris (#7), Barcelona (#12), Frankfurt (#15), and Amsterdam (#17) also cropped up here, corroborating the trending rankings to show there is interest for European summer travel. Large Asian metros such as Tokyo (#8), Hyderabad (#14), and Bangkok (#16) made an appearance as well. 

Most Popular Bookings (Where are Hopper users headed?)

  • Since Hopper users tend to skew towards younger leisure travelers, our bookings also tend to reflect this demographic’s interests.

  • Domestic: Las Vegas (#1), Miami (#2), and Orlando (#3) were the most booked summer domestic destinations. 

  • International: Cancun, Mexico (#1), San Juan, Puerto Rico (#2), and San Jose del Cabo, Mexico (#3) were the most booked summer international destinations.

Search Traffic + Demand Trends

When is Demand Clustering in 2021?

  • Domestic: We’re seeing domestic demand clustering in three places: late May into early June (around Memorial Day weekend), July 4th weekend, and mid-July. The signal for mid-July domestic travel interest is particularly strong, especially given that it’s still around 3 months out.

  • International: This varies by region. The strongest signal at the moment is for late-May for Mexico, Central America, and the Caribbean. Interest for Canada does seem to be clustering in the first full week of June, around June 4th-12th although the country currently remains closed to non-essential travel. There’s currently not a strong enough “higher than expected” signal for demand to other regions.

How far are travelers booking in advance?

  • Since Summer 2020, we’ve seen travelers booking closer to their date of departure. This makes sense in an environment where there can be uncertainty about how travel regulations and the pandemic itself will progress further down the line. How far travelers book in advance is a signal of traveller confidence, and here we compare it to pre-pandemic levels for context. The gap to pre-pandemic levels for advance has been closing since March 1st. 

  • Domestic: Pre-pandemic, travelers booked domestic flights around 45-50 days in advance. Currently, they are booking flights around 39 days in advance, up from 30 days at the start of the year. The gap to pre-pandemic booking advance for domestic flights is now < 5 days, signaling traveller confidence in domestic travel is high. 

  • International: Pre-pandemic, travelers booked international flights around 70-80 days in advance. Currently, they are booking flights around 53 days in advance, up from 45 days at the start of the year. The gap to pre-pandemic booking advance for international flights is < 20 days, which is much larger than domestic flights. This suggests some lingering hesitancy about booking international travel too far in advance.

Airfare Pricing Trends 

Price of Jet Fuel

The price of jet fuel according to the EIA has held relatively steady since March at $1.75/gallon. It has gradually increased since early January (around 26%). We do not expect it to contribute significantly to rises in airfare for this summer, which we estimate will be much more demand driven. 

Jet Fuel

Domestic Consumer Airfare Prices

Domestic airfare was steadily decreasing each year prior to the COVID-19 pandemic. Domestic airfare averaged $315, $306, and $291 per round-trip in 2017, 2018, 2019 respectively. In the wake of the COVID-19 pandemic in 2020, airfare plummeted 25% ($60) to an average of $220/round-trip. 

For the first time in four years, we’re anticipating average domestic airfare to be higher than the year prior. Thus far in 2021, domestic round-trip airfare has averaged $247 (up 12% from 2020), and we’re forecasting that to climb to an average of $281 by year end (up 28% from 2020). 

Good Deal Domestic Airfare

We usually see prices rise into the summer, fall in the autumn shoulder season, and rise again into the holiday season. This year, we expect prices to fall less after the summer, and spike more into the holidays as airlines capitalize on the improving domestic travel outlook amid the vaccine rollout.

Six-Month Price Forecast (Domestic)

Factors Pushing Up Airfare

  • Pent Up Travel Demand: In 2020, many Americans’ travel plans fell by the wayside amid the pandemic. In 2021, travelers will be looking to make up for that lost opportunity. We saw airfare climb 18% in March amid a surge in spring travel demand. We’re forecasting prices to climb 12% in May amid similar demand for summer travel. 

  • Seasonal Effects: Summer tends to be the peak travel season with holiday travel a close runner-up. The pent up travel demand compounded with seasonally higher summer prices makes for a steeper rise in airfare heading into the summer. 

Factors Countering the Rise in Airfare

  • Point-to-Point Leisure Travel Favors Low Cost Carriers’ Models: The current environment really plays well into the hands of low cost carriers such as Spirit, Southwest, Frontier, JetBlue and Allegiant. Point-to-point travel is on the rise, and upstart budget carriers like Avelo and Breeze Airways are seeking to compete for the growing leisure demand. The good news for travelers is that competition from low cost carriers tends to provide downward pressure on airfare.

  • Returning full seating capacity and fleets into operation: As demand picks up, airlines will return many grounded planes in their fleet to active service. This increases the supply of available seats and provides some downwards pressure to airfare. In mid-March, Cirium reported US major and regional airlines operated around 80% of their combined fleet

Domestic Airfare Forecast

We’re expecting round-trip domestic airfare to climb 4% in May after already rising 12% since April, totaling a 16% increase heading into the summer. Airfare should peak in late June before the July 4th holiday at $293. From there, we expect it to fall ~$30 heading into September, before rising 10% into October prior to fall and Thanksgiving travel. 

Good Deal 6 Month

Forecast by Month

We forecast Summer 2021 (June-August) will average $283 for domestic airfare, up 35% from Summer 2020 ($209), but down 4% from Summer 2019 ($296).

Forecast by Month

International Consumer Airfare Prices

International round-trip airfare averaged $857, $911, and $854 in 2017, 2018, and 2019 respectively. In 2020, we saw record low international airfare averaging $735. Unlike domestic airfare, which we forecasted to rise an average of 28% from 2020, we expect international airfare to increase just 4% to $763. We anticipate this modest rise from 2020 levels will be primarily driven by flights after August 2021. 

Good Deal International

Relative to domestic travel, international travel is much more regulated. Travelers currently still need to show a negative COVID-19 test before returning on an inbound flight to the U.S. Mexico, Central America, and the Caribbean collectively accounted for 76% of bookings on Hopper between mid-March to mid-April whereas Europe and Asia accounted for just 11% and 2% respectively. For comparison, in 2019 Europe accounted for 40% (and Asia for 7%) of Hopper bookings. Mexico, Central America, and the Caribbean accounted for 32% of bookings.

US to Europe Searches

However, trans-Atlantic travel to Europe looks like it could be in the cards this summer. The head of the European Commission, Ursula von der Leyen, told the NYTimes in an interview on Sunday, April 25th, that the bloc would potentially allow fully vaccinated American tourists to visit over the summer. On the day following the announcement, searches were up 47% to EU member countries specifically, and 47% to Europe as a whole. As of May 17th, the weekly average of searches is up 32% from the weekly average at the time of the announcement. 

Will re-openings cause prices to spike?

Some travelers might be concerned that if they wait until things reopen, the best deals could suddenly disappear. It might be comforting to know that this isn’t necessarily always the case. As travel restrictions are eased, carriers are able to operate increased capacity to the re-opened destination. Amid piecemeal easing of travel restrictions, unless demand spikes rapidly enough to outpace the increase in supply, flash sales can be found as airlines attempt to entice travelers to return.

Round-Trip Airfare vs searches (Iceland)

`Iceland is a great example. Iceland fully reopened to all vaccinated travelers (including U.S. travelers) on March 17th, after which it saw a 93% spike in searches -- the biggest one we’ve seen to-date in 2021 for reopening international search traffic from the U.S. But since March 17th, round-trip airfare from the U.S. has dropped from $697 to $550, a 21% decrease! 

Demand Spikes and Prices Drop -- Why does this happen? 

Usually as demand increases, so does price -- so why is the inverse occurring? As a result of strict COVID-19 travel restrictions to some destinations, airlines chose to operate fewer flights on these routes. In addition, several carriers abandoned once popular international routes altogether, further reducing supply. With such significant reductions to supply, prices have net-increased since January 2020 on a number of heavily restricted international destinations including Canada, Australia, New Zealand, and various countries in Europe and Asia. 

Demand and Prices

Upon a country’s reopening, airlines also tend to ramp up or restart service, which increases supply. Thus even as demand spikes, depending on how strict travel restrictions previously were, the increased supply of seats sold can help significantly lower prices. This is essentially what’s happened for U.S. to Iceland flights. 

It looks like airfare to other European destinations has now begun to rise on the back of renewed demand following the announcement that the bloc would potentially allow fully vaccinated American tourists to visit over the summer. Some destinations like Iceland and Lisbon haven’t seen that increase in airfare and could have great deals. 

Six-Month Price Forecast (International)

Factors Pushing Up Airfare

  • Heavy Travel Restrictions ⇒ Few Operating Flights: Carriers have had to significantly reduce flights to countries with tight travel restrictions. With less supply and competition, prices are higher for flights to countries with significant travel restrictions. 

  • Stronger Demand to Reopened Destinations: When an international destination reopens, we’ve seen a resurgence in search demand to that destination. Higher demand will drive higher airfare for reopened destinations. 

  • Seasonal Effects: Similar to domestic travel, summer tends to be the peak travel season for international flights from the U.S. We will likely observe seasonally higher prices to international leisure destinations. 

Factors Countering the Rise in Airfare

  • Piecemeal Re-Openings ⇒ More Operating Flights: As a counterpoint to the one above, we’ve seen some destinations like Iceland drop in airfare upon re-opening. Reopening a country can enable more competition and increase the supply of seats sold, which tends to lower airfare in some cases. 

International Airfare Forecast

Right now we think the seasonal effects and travel restrictions will continue to play out much the same way they did in 2020. Having risen 8% since April, we’re forecasting round-trip international airfare to rise an additional 3% into June to peak at $800 by late June.

We’re estimating the international airfare index to closely track 2020 until August, which is around when we’d expect to see a similar story as we’re seeing with domestic travel. In the late summer, we’re anticipating vaccinations will increasingly enable non-essential travel to regions currently restricted. This should lead to a shallower decrease in airfare into late August, with airfare holding steady into September. From there, we’re forecasting a 4% rise into October. 

International Good Deal Price

We forecast Summer 2021 (June-August) will average $775 for international airfare, up 3% from Summer 2020 ($755), but down 9% from Summer 2019 ($853). 

Summer 2021 Forecast

Trending Destinations for Summer 2021

Trending Methodology: Hopper collects, from several Global Distribution System partners, 25 to 30 billion airfare price quotes every day from searches happening all across the web. We use our search traffic data to track the rate of increase in searches for a destination over the latest 6 week period, filtering for summer departures dates (June 1st to August 31st, 2021). We rank cities by their rate of increase in search volume. 

This does not necessarily represent what’s most popular with travelers, but rather what’s quickly becoming more popular

Domestic: Santa Fe (#1), Portland (#2), Rapid City (#3), San Luis Obispo (#4) topped our domestic trending destination list. These smaller-to-mid-size cities are seeing strong renewed leisure travel interest, especially given how outdoor oriented they are. All four are a three hours drive away from a national park, and three have seen new or restored service from carriers in the past month. Philadelphia (#5), New York City (#6), Chicago (#7), and San Jose (#8) were close behind. Big cities have rarely appeared on our trending destinations radar in recent months, and this perhaps indicates travelers are finally beginning to feel more comfortable about spending time in a major metro. 

International: Dubrovnik (#1), Reykjavik (#2), and Abu Dhabi (#3) were the highest trending international destinations, suggesting U.S. travelers are interested in venturing beyond Mexico and the Caribbean when they get the chance. Croatia and Iceland recently waived quarantine and testing requirements for fully vaccinated foreign travelers on April 2nd and March 17th respectively. We’ve noticed a trend that cities of recently reopened countries tend to rapidly climb to the top of our international trending destination rankings. Israel meanwhile is experiencing a highly successful vaccine rollout, boosting tourist interest. Aside from Croatia, other Mediterranean destinations such as Athens (#7), Larnaca (#14), and Istanbul (#11) also seem appealing to travelers. Canada and Mexico each had three cities in our Top 20 showing there is still interest in traveling close to home, although Canada remains closed to non-essential travel. 

Trending DomesticInternational Trending

Most Searched Destinations for Summer 2021

Most Popular Methodology:  Hopper collects, from several Global Distribution System partners, 25 to 30 billion airfare price quotes every day from searches happening all across the web. Here we simply rank destinations by which ones have received the most searches in the last 6 weeks, filtering for summer departures dates (June 1st to August 31st, 2021). 

If trending is a measure of “What’s changing in where people are thinking of going?”, most popular is a measure of “Where are most people thinking of going?” Note that this does tend to favor larger cities. 

Domestic:  

Las Vegas (#1), Denver (#2), and Miami (#3) topped the most popular destinations in searches for domestic summer flights. Big cities conventionally popular with tourists performed really well.

International:  San Juan (#1), Cancun (#2), and Mexico City (#3) topped the most popular destinations in searches for international summer flights. Mexico, Central America, and the Caribbean continued to dominate this list with 10 of the Top 20 spots. European destinations such as London (#4), Paris (#7), Barcelona (#12), Frankfurt (#15), and Amsterdam (#17) also cropped up here, corroborating the trending rankings to show there is interest for European summer travel. Large Asian metros such as Tokyo (#8), Hyderabad (#14), and Bangkok (#16) made an appearance as well.

Domestic Most Popular In SearchesInternational Most Searched

Most Booked Destinations for Summer 2021

Please note: Since Hopper users tend to skew towards younger leisure travelers, our bookings also tend to reflect this demographic’s interests. We’d suggest “Most Popular in Searches” above for popular destinations more representative of the overall population.

Domestic: Las Vegas (#1), Miami (#2), and Orlando (#3) topped the most booked summer domestic destinations on Hopper.

International: Cancun (#1), San Juan (#2), and San Jose del Cabo (#3) topped the most booked summer international destinations on Hopper.

Top Booked Destinations for Summer 2021

Where is Demand Clustering?

With some lingering uncertainty about how the rest of the year might shape up, maybe you’re wondering if more folks are looking to the fall or winter season for travelling. We took a look at which dates tended to have higher than usual search volumes. While this does highlight holidays that are especially popular for travelers, it also reveals other dates that might see higher travel. 

Domestic | Mid-July

We’re seeing domestic demand clustering in three places: late May into early June (around Memorial Day weekend), July 4th weekend, and mid-July. The signal for mid-July domestic travel interest is particularly strong, especially given that it’s still around 2 months out. We’re keeping our eyes on the weekend of August 13th/14th as well, which is gradually appearing on our radar.

Demand

International | Varies by Region

International demand varies significantly by region due to varying travel restrictions and timelines. The strongest signal at the moment is for late-May for Mexico, Central America, and the Caribbean. Interest for Canada does seem to be clustering in the first full week of June, around June 4th-12th although the country currently remains closed to non-essential travel. 

We’re not yet seeing a significant signal for demand clustering to Europe, Asia, Africa, or the Middle East. There may be individual countries within those regions seeing demand focus on specific departure dates, but the regions as a whole aren’t yet there due to travel restrictions.

  • Mexico, Central America, & the Caribbean : late-May, around May 25th-28th

Demand Intl
  • Canada : June 4th - June 12th

  • Europe, Asia, & Africa/Mideast  : No significant signal for the region as a whole yet

Demand Intl

How far in Advance are Travelers Booking Flights?

Since Summer 2020, we’ve seen travelers booking closer to their date of departure. This makes sense in an environment where there can be uncertainty about how travel regulations and the pandemic itself will progress further down the line. How far travelers book in advance is a signal of traveller confidence, and here we compare it to pre-pandemic levels for context. 

Domestic | 39 Days on average

Pre-pandemic, travelers booked domestic flights around 45-50 days in advance. Currently, they are booking flights around 39 days in advance, up from 30 days at the start of the year. The gap to pre-pandemic booking advance is now < 5 days for domestic flights, signaling traveller confidence is nearing pre-pandemic levels for domestic flights.

Advance

International | 53 Days on average

Pre-pandemic, travelers booked international flights around 70-80 days in advance. Currently, they are booking flights around 53 days in advance, up from 45 days at the start of the year. 

Int'l Advance

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