U.S. Airfares Are the Lowest on Record (But There’s a Catch)
U.S. airfares averaged $343 in the third quarter of 2018, down 0.4% from a year earlier. Adjusted for inflation, that’s the cheapest airfare ever recorded since the Bureau of Transportation Statistics began collecting airfare data in 1995.
The BTS said the average airfare in the third quarter combined both one-way and round-trip fares. One-way tickets, which made up 40% of the total, had an average fare of $249. Fares for round-trip tickets, which composed the other 60%, averaged at $417.
During the 24-and-a-half years since the BTS started collecting data, airfares peaked at $332 in 1999, or $508 when adjusted to 2018 dollars. That marks a 32% decline in airfares since the late 1990s, driven in good part by the rise of online-travel sites like Expedia and Priceline, which allow travelers to easily compare airfares to find the cheapest option.
As welcome as lower fares are to consumers, they come with a catch. Beginning in 2008, according to the BTS, airlines began introducing so-called “ancillary fees,” an industry term for the surcharges airlines impose on services that passengers had long taken for granted: checking in luggage, on-board meals, assigned seating, or adequate legroom. That helped the industry maintain revenue growth even as airfares declined.
How much have those ancillary fees helped airlines? According to IdeaWorks, an airline research and consulting firm, ancillary revenue in 2018 totaled an estimated $93 billion in 2018, up 5% from the previous year and up 311% since 2010, when IdeaWorks began tracking ancillary-fee data.
That’s fine for travelers who don’t check extra bags, pack their own on-board lunches, don’t care what seat they are assigned, and are comfy in cramped seating. For them, traveling is cheaper than ever. For many others, the costs of flying have simply been shuffled around.