Increase in Airfare Domestic Flights Remain Lower Than Inflation Rate, Reveals Study
In the realm of U.S. air travel, a fascinating transformation has been unfolding over the past decade. According to recent data, airfare prices have generally been on a downward trend, contrasting with the overall increase in inflation rates.
**Change Over Time**
Comparing May 2025 to May 2015, U.S. airfares have dropped by 18.5%. More recently, domestic airfares decreased by 7.4% from May 2024 to May 2025[2]. These figures suggest a consistent trend of lower airfare prices over the years.
**Year-over-Year Adjusted for Inflation**
Inflation-adjusted airfare prices fell by 9.5% year-over-year as of May 2025[4]. This indicates that airfare inflation has been lower than the general inflation rate.
Several factors have contributed to this trend, including unbundling and ancillary fees, market competition, and economic conditions.
**Unbundling and Ancillary Fees**
Airlines have increasingly offered lower base fares but charge extra for services like baggage handling and seat selection. These fees, not captured in basic fare data, can still impact travelers' budgets[2].
**Market Competition and Demand**
Changes in demand and competitive pressures have influenced fare pricing. Airlines have adapted their strategies to maintain profitability despite declining fares[4]. The entrance of two new low-cost airlines in 2021 added more competition to the market[1].
**Economic Conditions**
Economic factors, such as inflation and consumer spending habits, also play a role in airfare pricing and airline profitability[4].
In early 2025, there was a notable shift in airline pricing driven by macro-economic conditions and high-profile flight incidents. U.S. airlines responded by offering lower fares and maintaining these lower thresholds closer to departure dates, due to slowing travel demand in early 2025[3]. Airlines also trimmed their capacity to better align supply with demand, leading to fare stabilization in 2025[3].
It's essential to consider both the changes in airfare prices and the broader inflation trends when comparing the cost of domestic airfare to the overall rate of inflation from 2019 to 2025.
**Overall Inflation Trends**
The overall Consumer Price Index (CPI) has seen fluctuations, with a general increase in costs over the past few years. For instance, the CPI rose by 2.7% in the twelve months ending June 2025[5].
**Comparing Airfare to Inflation**
Despite the decreasing trend in airfare prices, the cost of living in the U.S. has still risen significantly. For example, the cost of a gallon of gas increased by 21.9% from 2019 to 2025, while the cost of a loaf of bread increased by 44.6%[6]. The cost of a gallon of milk increased by 32.2%, and the cost of a dozen eggs surged by 80% during the same period[6].
In contrast, domestic economy fares increased by only 10.7% from 2019 to 2025[6]. Domestic business class fares increased by a mere 1.5% over the same period[6].
In summary, domestic airfare in the U.S. has generally decreased relative to the overall inflation rate from 2019 to 2025, influenced by factors like unbundling, market competition, and economic conditions. This trend, however, is not reflected in the overall increase in the cost of living in the U.S. during the same period.
Jason Kramer, FCM Consulting's Global Senior Air Consultant, provided insights on U.S. airline pricing strategies in 2025[1]. His analysis underscores the complexity of the airline industry and the various factors that influence airfare pricing.
Despite the lowering airfare prices over the past decade, the lifestyle of traveling in the U.S. has not necessarily become more affordable when compared to the overall inflation trend, as evidenced by the rising costs of goods such as gas, bread, milk, and eggs.
Simultaneously, the decline in airfare prices has been influenced by factors like unbundling, market competition, and economic conditions, with airlines offering lower base fares and charging extra for ancillary services. This trend, however, does not totally compensate for the overall increase in costs of living in the U.S.
