“Airline fares are set based on demand. But when fuel is low, and when a third of your cost drops by 50 percent, when it drops that much you do tend to grow,” Savanthi Syth, senior vice president of airlines global research Raymond James & Associates told Bloomberg News in June. “You can offer lower fares and stimulate traffic.”
So far in 2017, demand has grown — globally, second quarter growth rates this year rose at an unprecedented pace, and that's after 2016, when U.S. airlines carried more passengers than ever before. Those trends, combined with the fuel costs that are expected to remain low at least for the next few months, mean airlines are more willing to add more flights. For instance, a discounted red-eye that may fly with less than full capacity wouldn't make economic sense for the airlines if operating costs were higher. Under current conditions, more such flights are popping up, giving consumers additional options at lower prices. In addition, low-cost foreign carriers, including Wow Air and Norwegian Air, increased capacity to the U.S. this month by 61 percent over the same time last year, introducing brand-new, often much cheaper options for travelers.
According to the airfare app Hopper, this summer's low prices continue a downward trend in overall fares that has lasted for the past three years, with current price levels hitting 2009 price levels. But like a summer romance, this price dip won't last forever: The company predicts that although fares will continue to drop throughout the summer and into the fall, they will be on the rise again once the holiday travel season begins in November.