CBS News reports that average domestic airfare has dropped nearly 8% for the first half of 2016 since last year. It hasn’t been this low since 2010. In fact, vacation fares have dropped 17 percent since last July.
One major factor might be bargain fare carriers like Spirit, Frontier and Allegiant have grown dramatically. They’ve expanded capacity while exogenous factors including: terror attacks in Europe, economic uncertainty in Britain due to Brexit, a strong dollar, and increased competition are cutting into profitable routes for United, American, Delta and Southwest. Low fuel prices have not been that much help for the traditional carriers.
2015 brought record airline profits. Air carriers have lower expectations for the balance of 2016.
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