Higher airfare is expected this year due to strong demand and limited capacity growth in the airline industry. According to fare-tracking platform Hopper, domestic airfare in the U.S. is up 12% in January compared to last year, with prices expected to remain high through at least June. Factors such as delayed aircraft deliveries, air traffic constraints, and financial pressures have restricted airlines from expanding flights, leading to increased fares.
American Airlines anticipates a revenue increase of up to 5% in the first quarter of this year, despite flat or decreased capacity. The airline’s Chief Financial Officer, Devon May, mentioned that airfare is likely to rise. However, American Airlines also expects a larger-than-expected loss in the first quarter due to rising costs, including higher wages from recent labor contracts.
Breeze Airways reported its first quarterly operating profit in the fourth quarter, with founder David Neeleman expressing optimism about future results. Alaska Airlines and United Airlines also expect revenue growth in the first quarter, with United highlighting improvements in the domestic pricing environment as airlines focus on profitability.
Delta Air Lines forecasts revenue growth of 7% to 9% in the first quarter, with strong off-season travel to Europe contributing to positive results. Carriers are observing an increase in customers opting for premium seating options. JetBlue Airways and Southwest Airlines are set to announce their fourth-quarter results and 2025 outlooks, aiming to boost revenue through new premium seating and other amenities.
