The travel industry appears to have finally rebounded from the COVID crash, with an average of 1.95 million passengers passing through US airports each day in January 2023. This is down just 1% from January 2020, before the pandemic hit.
In fact, with lockdowns now apparently in the rearview, airline executives believe the travel industry could benefit from pent-up demand over the coming years, possibly leading to tens of billions in additional revenue for airlines. Many major airlines are already cash flow-positive and have been able to start paying down the debt they took on during the pandemic.
Strong Travel Spending
Following a year of record inflation and increased interest rates, consumer spending has slowed down in a few major categories, like homes and cars. For example, existing home sales have declined for 11 months in a row. Meanwhile, travel spending remains strong.
According to data from American Express (AXP), company credit card spending on travel and entertainment was 34% higher in Q4 2022 than in the same period the year before. This means that companies not only feel it’s safe enough to start sending employees on trips again but they have also budgeted to compensate for such expenses.
Book That Ticket
While this resurgence in demand is a good sign for the economy as a whole, infrastructure issues at major US airports and a shortage of airline pilots could make it hard for US airlines to meet the rising demand.
With demand outpacing supply, analysts expect the cost of airline tickets to increase over the coming months.
So, if you’ve got a trip coming up, you may save on your fare by booking sooner rather than later, searching for flights directly through airline websites instead of flight aggregators, or using credit card points or airline miles to book your flight. And, if you don’t, now might be the time to plan one.
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