Changes in US Flight Prices
US domestic airfare dropped an average of 14% between March 4th and March 7th to $230 round-trip. Destinations like Miami, New York, and Las Vegas dropped in price upwards of 29%.
Massive price drops from many domestic airlines came as demand for travel has shifted towards domestic destinations in the wake of the spread of COVID-19. Demand for domestic travel has grown 6.5% since the first week of January, compared to a 1.3% increase at the same time in 2019.
The move from airlines came as business travel has dropped dramatically as corporations are advising employees to limit corporate travel for the time being and many large conferences like SXSW are being cancelled. Airlines are slashing prices to further incentivize leisure travel within the US.
According to the CDC, travelers should avoid all nonessential travel to countries with level 3 alerts including China, Italy, Iran and South Korea. The CDC has advised older adults or those who have chronic medical conditions to consider postponing travel to countries with level 2 alerts such as Japan. However, domestic travel within the US is still considered safe, according to the CDC’s latest guidance.
To mitigate coronavirus concerns, a number of carriers including American Airlines, Alaska Airlines, Delta, JetBlue, and United have announced they will be waiving some change and cancellation ticket fees for both domestic and international flights.
Shifts in Travel Demand
In the wake of the spread of Coronavirus across China, there has been a shift in where US travelers are looking to book travel. Demand for domestic travel has grown 6.5% since the first week of the year, compared to a 1.3% increase at the same time in 2019.
Demand for travel to Europe is down 5.8% compared to the first week of the year, compared to just a 0.9% drop in the same time in 2019.
Domestic travel and some travel to Canada have picked up 100% of the share lost by international destinations since January.
Demand to Asia has dropped the most, down 23% since the beginning of the year, compared to 0.7% drop in the same period last year.
Oil Prices & Outlook
Oil prices have dropped in the wake of the spread of the Coronavirus, in response to mass cancellations across China and many other countries experiencing widespread outbreaks. On March 9th, prices dropped ~30% to $35/barrel following the continued contraction of demand for oil from both airlines and other industries impacted by the spreading virus. Low oil prices are likely to continue unless oil producers can align on a unified reduction in production to re-stabilize supply and demand for oil in the market. Low oil prices and volatile demand for travel in the industry will likely mean prices will remain low for travelers through spring and potentially into summer 2020.
Biggest Domestic Price Drops
The data utilized for this study comes from Hopper's real-time "shadow traffic" containing the results of consumer airfare searches. Hopper collects, from several Global Distribution System partners, 25 to 30 billion airfare price quotes every day from searches happening all across the web. The prices reflected in this analysis are Hopper’s “good deal price” which represents what a typical leisure traveler should expect to pay, measured using a “tenth percentile.”