If you’ve planned a trip the first half of next year, should you buy your airline tickets now?
The answer’s easy if you’re traveling economy class: buy now. It’s a more difficult decision if you’re traveling in upper class.
Right now there are really good economy and upper class fares worldwide, but the airlines are holding back releasing the good upper class fares. What I mean is that even though a certain aircraft might be totally empty in the upper class cabin, the airlines will claim that the attractive business class fare is sold out. They’re betting right now that either you aren’t disciplined enough to wait, or that the world will be so perfect a few months from now that demand will be really strong and they can drop those teasing fares altogether.
But if you’re traveling economy class, there’s no need to read any further. Buy now. Right now. The bulk of any aircraft is economy seats. Simple demand economics drives airlines’ economy fares. There’s no playing around as with the upper class cabin. As economy seats are bought, fares rise.
The embarrassing fact for a rich traveler is that the airlines have concluded that you really don’t care whether your fare from New York to Cape Town is $4000 or $8000. They’ve concluded that the difference of $4000 is marginal to your decision-making, and they’re right.
Airlines today are more profitable than ever, even though actual number of passengers flown is less than pre-Covid numbers, and actual gross revenue earned is still $35 billion less than in 2019. They’ve managed this magic trick in large part by jacking up upper-class fares to roughly double what they were in 2019, while letting the demand market still govern economy fares. Many economy fares are today lower than they were in 2019.
Isn’t it fraud to publish a business-class fare, then claim that it’s not available on an empty aircraft?
No, if it is possible to get that fare albeit not at the times you want. So if you’re an upper-class traveler and are flexible with your departure and return by 2-3 days in either direction, then you’ll likely be able to snatch that attractive business class fare.
Upper-class but not flexible by 2-3 days? Wait if you can.
“If you can” is an important caveat. Playing the market – waiting for the better business class fares to be released – is stressful. The airlines know that upper-class vacation travelers are nervous nillies, reactionary and anxious to get all their arrangements in line. So while right now most upper class cabins for next year are empty, the airlines still aren’t releasing their better upper class fares. You can play the market. But the airlines are playing that you won’t.
What will trigger the airlines to release those great business fares?
(1) The Global Economy. (2) The War in Ukraine. (3) The American Election.
If you believe there will be positive outcomes to all the above, buy your upper class ticket, now, because fares will only then go higher. If you believe that two of the three will not have positive outcomes by early next year, then wait.
(1) Historically the business cabin was filled with business people. Business travelers rarely know their plans more than a few weeks out and care less about what the fare is than leisure travelers. Since Covid, though, the international business cabin has filled with a majority of vacation travelers not business travelers.
This is because except in the U.S. the economies of most countries are pretty grim right now. Businesses in Europe continue to pull back. Asian business is also still contracting.
Today a business class fare on American Airlines from Chicago to Dallas is about twice as much as a business class fare from Chicago to Sydney. That’s because business in the U.S. is robust, and because business in the rest of the world is weak.
As the global economy improves, business class fares worldwide will increase. If the global economy remains weak, those great business class fares will suddenly become available.
(2) The loss of grain caused by the war in Ukraine is very seriously effecting the economies of most of the world except the U.S. and Canada. And apart from these economic components, the political component of Russian ascension is a terrifying prospect that impedes vacation travel.
(3) It’s not just because Trump is involved, because the year of an American presidential election has always resulted in lower air fares. Go figure: Maybe because Americans have never totally trusted their society and are always anxious when a change is possible. Whatever the reason Trump accentuates this enormously. I bet that the more likely a second Trump presidency seems, the lower go business class fares. And the opposite is also true: the less likely a second Trump presidency seems, the higher go the fares.
The crazy path that airline fares have taken since the dissolution of the CAB in 1985 reflects another sobering fact: the gap between the rich and poor is getting larger. The gap between economy fares and business fares has spread almost as astronomically as America’s income gap. And that translates far and wide, even to my neck of the woods in the distant Serengeti. Travelers to places afar are richer than they’ve ever been. The poor working sop who’d like to walk the Great Wall can’t afford it, anymore.
So the airline fares game, today, is really just for players in the upper class cabins. Economy travelers: don’t wait.