Airfares Just Surged 25.5%—Yet They’re Still 20% Cheaper Than 2016 After Inflation

Airfares rose 25.5% over the past year. Airlines bragged about high fares on their earnings calls, and pledged to work to keep them elevated even if fuel prices fall. But what almost no one talks about is that fares are mostly above historic levels only because of pandemic-era inflation. In real terms, fares are actually 20% lower than they were a decade ago even after the recent run up, and that includes fees. Consumer Price Index data shows airfares increasing 2.2% in July after rising 0.2% in June. Core inflation, excluding food and energy, has moderated (2.5% over prior year, though recently elevated). Even as airfares rose, as airlines cut bak on planned capacity growth amidst increased oil prices, hotel rates have been falling. Cheaper Hotels Help Balance Expensive Tickets The price index for lodging fell 2.8% in July after declining 2.3% in June. Since December, seasonally adjusted airfares are up 19.9% lodging prices are down 1.2% That’s not, therefore, a ‘travel boom’. One reason airfares have been able to rise without depressing demand is that the total cost of a trip isn’t rising at the same rate, given that offset. The current airfare increase looks even more interesting in context. Seasonally adjusted airfares are down significantly relative to overall consumer prices over the past decade. Nominal airline fares increased about 11.5% between the 2016 average and July 2026. Overall consumer prices rose 38.7%. Airfares failed to keep pace with the cost of everything else. This underscores while airfares have seen a recent run up, that’s off of incredible lows. Fares are meaningfully higher than a year ago. They are much cheaper than 10 years ago. Topics on this page