Why did airfares fall to record lows in the U.S.?

U.S. domestic airfares were the lowest on record in the second quarter, another illustration of how the coronavirus pandemic destroyed demand for air travel. How did this come about?

See also: Southwest Airlines offers tickets from $39 for winter travel.

Average one-way ticket prices plummeted 26% over the same period last year to $151, including taxes and fees, according to 20-year airfare figures compiled by Cirium, the agency specializing in data collection and analysis of the aviation industry in the United States.

Previously, the biggest drop had been 14% at the end of 2001, following the September 11 terrorist attacks, the aviation data provider said Tuesday.

See also: American Airlines plans to start flights with the Boeing 737 Max at the end of December.

The demand for travel in the US practically disappeared in March, dragging the airlines into their worst crisis, less than two months after the first case of coronavirus was identified in the country.

As many Americans took refuge in their homes, the airlines reduced their schedules, parked planes, increased loans, and received $25 billion in federal payroll support, plus billions more in government loans.

The lowest fare, according to Cirium data, was $149 in the fourth quarter of 2004, in nominal terms. But that would be about $203 in today’s dollars, after adjusting for inflation.

Cirium’s report is based on data collected by the U.S. Department of Transportation.

The government agency delayed its report on second-quarter rates, which was due Tuesday, to review the information, a spokesman said.

In addition to the massive drop in customers, airlines are also suffering from the loss of business travelers, who tend to buy tickets closer to their travel date and pay more than people who travel for pleasure.

“It’s a mixed bag: the customers who fly now are the ones who pay the least,” said Jim Ogden, director of Cirium and American Airlines network explorer.

Today, leisure travelers are gradually returning to the airports, and on Sunday the volume of passengers topped $1 million for the first time since March 16, according to review data from the Transportation Security Administration.

Airlines are introducing new routes and ticket offerings to take advantage of as much spending availability as possible, given the shortage of corporate and international passengers.

Southwest Airlines, for example, began a sale of $39 fares to many of its destinations.

By Bloomberg – El Tiempo