This Thanksgiving, U.S. airlines are seeing record passenger numbers and fuller planes, with fares climbing due to limited capacity and reduced competition from budget carriers.

Record Passenger Numbers:

  • 31 million passengers are expected to fly during Thanksgiving week, according to Airlines for America.
  • Airline capacity has grown but lags behind demand, with 84% of seats filled in 2024, up from 74% in 2003.
  • Even off-peak periods have tighter availability; January 2024 saw 79% of seats filled compared to 69% in 2004.

Rising Airfares:

  • Consumer Price Index data shows airfares up 10% between July and October 2024, adjusted for seasonality.
  • Budget airline struggles contribute to higher fares:
    • Spirit Airlines: Filed for bankruptcy, cutting capacity by 16% for the holiday period.
    • JetBlue Airways: Reduced flights by 13% year-to-date, following a blocked merger with Spirit.
    • Southwest Airlines: Trimmed flights by 4% and introduced higher-priced seats with extra legroom.
  • “Junk Fees” Add to Costs:
    • Between 2018 and 2023, major airlines earned $12 billion from charges for preferred seating and other extras.

Industry Consolidation:

  • Critics point to the consolidation of 11 airlines into 4 major carriers (American, United, Delta, and Southwest) controlling 80% of U.S. air traffic as a major factor behind limited capacity and rising fares.
  • Reduced competition allows airlines to increase ticket prices and offer fewer budget-friendly options.

Shift in Low-Fare Market:

  • Budget carriers historically pressured larger airlines to offer cheaper “basic economy” seats.
  • With fewer flights from Spirit, JetBlue, and Southwest, the availability of low-cost options has shrunk.

Airline Profitability:

  • Executives from major carriers, including United Airlines, have highlighted reduced competition as boosting fares:
    • United CEO Scott Kirby noted the “exit of unprofitable capacity” has improved the domestic airfare environment.

As airlines face record demand during the holiday season, limited capacity and consolidation have driven up ticket prices, leaving passengers to bear the cost. With budget airlines pulling back and major carriers capitalizing on reduced competition, holiday air travel is becoming increasingly expensive, even as more passengers pack into fuller planes.