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    4 Big Airlines Face U.S. Inquiry Over Frequent Flier Programs

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    The Transportation Department ordered American, Delta, Southwest and United to share more information about their rewards practices to ensure they are fair to consumers and rivals.The Transportation Department announced on Thursday that it was investigating the rewards programs of the country’s four biggest airlines, part of the agency’s continuing efforts to bolster protections for air travelers.As part of the inquiry, Transportation Secretary Pete Buttigieg ordered the carriers — United Airlines, Delta Air Lines, American Airlines and Southwest Airlines — to furnish the agency with records and detailed information about their loyalty programs.The agency said its investigation was “focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.”Mr. Buttigieg said in a statement that such programs “are controlled by a company that can unilaterally change their value.”“Our goal is to ensure consumers are getting the value that was promised to them,” he added, “which means validating that these programs are transparent and fair.”Airlines’ policies have been in the Biden administration’s cross hairs for months as it has tried to clamp down on practices that it sees as unfavorable to consumers. In April, the Transportation Department issued new rules requiring airlines to offer refunds when flights are canceled or delayed and to reveal all fees before a ticket is purchased.Mr. Buttigieg expressed concerns about loyalty programs in May during a joint hearing of the Transportation Department and the Consumer Financial Protection Bureau on airline loyalty and credit card programs. He said the agency was examining whether the companies were being straightforward with customers about what they would receive and whether they were “getting the deal that they were promised.”The agency, he added at the time, was also looking into the impact of the programs on competition in the industry, and whether some were “being operated in a way that has the potential to block the entry or growth of smaller airline competitors, which could ultimately limit options for consumers.”In statements, Delta and Southwest defended their loyalty programs. American and United referred requests for comment to Airlines for America, a trade association that represents the country’s biggest airlines, which said in a statement that “U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”Last year, Delta prompted an outcry among travelers when it announced changes to its SkyMiles frequent flier program. The airline later adjusted its modifications. More

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    To Avoid an Economic Recession, Consumer Spending Is Key

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    It has powered the economic recovery from the pandemic shock. Now wallets are thinner, and some businesses are feeling the difference.The economy’s resurgence from the pandemic shock has had a singular driving force: the consumer. Flush with savings and buoyed by a sizzling labor market, Americans have spent exuberantly, on goods such as furniture and electronics and then on services including air travel and restaurant meals.How long this spending will hold up has become a crucial question.Despite contortions in world markets, many economists are cautioning that there is no reason to panic — at least not yet. In July, there was a notable slowdown in hiring and a jump in the unemployment rate to its highest level since October 2021, but consumer spending has remained relatively robust. Wages are rising, though at a slower rate, and job cuts are still low.“Overall, there isn’t evidence of a retrenchment in consumer spending,” said Gregory Daco, chief economist at the consulting firm EY-Parthenon. The strength of spending helped power greater-than-expected economic growth in the spring.That could change if the labor market’s slowdown accelerates.Already, some consumers, especially those with lower incomes, are feeling the dual pinch of higher prices and elevated interest rates that are weighing on their finances. Credit card delinquencies are rising, and household debt has swelled. Pandemic-era savings have dwindled. In June, Americans saved just 3.4 percent of their after-tax income, compared with 4.8 percent a year earlier.On calls with investors and in boardrooms around the country, corporate executives are acknowledging that customers are no longer spending as freely as they used to. And they are bracing themselves for the slide to continue.“We are seeing cautious consumers,” Brian Olsavsky, Amazon’s chief financial officer, said on a call with reporters last week. “They’re looking for deals.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Airlines Hoping for More Boeing Jets Could Be Waiting Awhile

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    The Federal Aviation Administration’s decision to limit Boeing’s production of 737 Max planes could hurt airlines that are struggling to buy enough new aircraft.Boeing hoped 2024 would be the year it would significantly increase production of its popular Max jets. But less than a month into the year, the company is struggling to reassure airline customers that it will still be able to deliver on its promises.That’s because the Federal Aviation Administration said on Wednesday that it would limit the plane maker’s output until it was confident in Boeing’s quality control practices. On Jan. 5, a panel blew off a Boeing 737 Max 9 body shortly after takeoff, terrifying passengers on an Alaska Airlines flight and forcing the pilots to make an emergency landing at Portland International Airport in Oregon. Almost immediately, the F.A.A. grounded some Max 9s.Since then, details have emerged about the jet’s production at Boeing’s facility in Renton, Wash., that have intensified scrutiny of the company’s quality control. Boeing workers opened and then reinstalled the panel about a month before the plane was delivered to Alaska Airlines.The directive is another setback for Boeing, which had been planning to increase production of its Max plane series to more than 500 this year, from about 400 last year. It also planned to add another assembly line at a factory in Everett, Wash., a major Boeing production hub north of Seattle.As part of the F.A.A.’s announcement on Wednesday, it also approved inspection and maintenance procedures for the Max 9. Airlines can return the jets to service once they have followed those instructions. United Airlines said on Thursday that it could resume flying some of those planes as soon as Friday.The move is another potential blow to airlines. Even though demand for flights came roaring back after pandemic lockdowns and travel restrictions eased, the airlines have not been able to take full advantage of that demand. The companies have not been able to buy enough planes or hire enough pilots, flight attendants and other workers they need to operate flights. A surge in the cost of jet fuel after Russia invaded Ukraine also hurt profits.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    Will America’s Good News on Inflation Last?

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    One of the biggest economic surprises of 2023 was how quickly inflation faded. A dig into the details offers hints at whether it will last into 2024.Prices climbed rapidly in 2021 and 2022, straining American household budgets and chipping away at President Biden’s approval rating. But inflation cooled in late 2023, a spurt of progress that happened more quickly than economists had expected and that stoked hopes of a gentle economic landing.Now, the question is whether the good news can persist into 2024.As forecasters try to guess what will happen next, many are looking closely at where the recent slowdown has come from. The details suggest that a combination of weaker goods prices — things like apparel and used cars — and moderating costs for services including travel has helped to drive the cooldown, even as rent increases take time to fade.Taken together, the trends suggest that more disinflation could be in store, but they also hint that a few lingering risks loom. Below is a rundown of the big changes to watch.What we’re talking about when we talk about disinflation.What’s happening in America right now is what economists call “disinflation”: When you compare prices today with prices a year ago, the pace of increase has slowed notably. At their peak in the summer of 2022, consumer prices were increasing at a 9.1 percent yearly pace. As of November, it was just 3.1 percent.Still, disinflation does not mean that prices are falling outright. Price levels have generally not reversed the big run-up that happened just after the pandemic. That means things like rent, car repairs and groceries remain more expensive on paper than they were in 2019. (Wages have also been climbing, and have picked up more quickly than prices in recent months.) In short, prices are still climbing, just not as quickly.What inflation rate are officials aiming for?The Federal Reserve, which is responsible for trying to restore price stability, wants to return price increases to a slow and steady pace that is consistent with a sustainable economy over time. Like other central banks around the world, the Fed defines that as a 2 percent annual inflation rate. What caused the 2023 disinflation surprise?Inflation shocked economists in 2021 and 2022 by first shooting up sharply and then remaining elevated. But starting in mid-2023, it began to swing in the opposite direction, falling faster than widely predicted.As of the middle of last year, Fed officials expected a key measure of inflation — the Personal Consumption Expenditures measure — to end the year at 3.2 percent. As of the latest data released in November, it had instead faded to a more modest 2.6 percent. The more timely Consumer Price Index measure has also been coming down swiftly.The surprisingly quick cooldown started as travel prices began to decelerate, said Omair Sharif, founder of Inflation Insights. When it came to airfares in particular, the story was supply.Demand was still strong, but after years of limited capacity, available flights and seats had finally caught up. That combined with cheaper jet fuel to send fares lower. And while other travel-related service prices like hotel room rates jumped rapidly in 2022, they were increasing much more slowly by mid-2023.Travel inflation is returning to normalHotel price increases look much as they did before the pandemic, while airfares have recently fallen.

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    Year-over-year percentage change in Consumer Price Index categories
    Source: Bureau of Labor StatisticsBy The New York TimesThe next change that lowered inflation came from goods prices. After jumping for two years, prices for products like furniture, apparel and used cars began to climb much more slowly — or even to fall.The amount of disinflation coming from goods was surprising, said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. And, encouragingly, “it was reasonably broad-based.”Used car deflation is backUsed vehicle prices fell in 2023. New car prices have been climbing, but more slowly than in 2022.

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    Year-over-year percentage change in Consumer Price Index categories
    Source: Bureau of Labor StatisticsBy The New York TimesThe inflation relief came partly from supply improvements. For years, snarled transit routes, expensive shipping fares and a limited supply of workers had limited how many products and services companies could offer. But by late last year, shipping routes were operating normally, pilots and flight crews were in the skies, and car companies were churning out new vehicles.“The supply side is at work,” said Skanda Amarnath, executive director at the worker-focused research group Employ America.What could be the next shoe to drop?In fact, one source of long-awaited disinflation has yet to show up fully: a slowdown in rental inflation.Private-sector data tracking new rents soared early in the pandemic but then slowed sharply. Many economists think that pullback will eventually feed into official inflation data as renters renew their leases or start new ones — but the process is taking time.Housing inflation remains faster than normalRent increases and a measure that approximates the cost of owned housing are both slowing only gradually.

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    Year-over-year percentage change in Consumer Price Index categories
    Source: Bureau of Labor StatisticsBy The New York Times“We’re likely to see more moderation in rent,” said Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives. Because a bigger rent cooldown remains possible and goods price increases could keep slowing, many economists expect overall consumer price inflation to fall closer to the Fed’s goal by the end of 2024. There is even a risk that it could slip below 2 percent, some think.“It’s a scenario that deserves some discussion,” Ms. Rosner-Warburton said. “I don’t think it’s the most likely scenario, but the risks are more balanced.”What could go wrong?Of course, that does not mean Fed officials and the American economy are entirely out of the woods. Falling gas prices have been helping to pull inflation lower both overall and by feeding into other prices, like airfares. But fuel prices are notoriously fickle. If unrest in gas-producing regions causes energy costs to jump unexpectedly, stamping inflation out will become more difficult.Geopolitics also carry another inflation risk: Attacks against merchant ships in the Red Sea are messing with a key transit route for global commerce, for instance. If such problems last and worsen, they could eventually feed into higher prices for goods.And perhaps the most immediate risk is that the big inflation slowdown toward the end of 2023 could have been overstated. In recent years, end-of-year price figures have been revised up and January inflation data have come in on the warm side, partly because some companies raise prices at the beginning of the new year.“There is a bunch of choppiness coming,” Mr. Sharif said. He said he’ll closely watch a set of inflation recalculations slated for release on Feb. 9, which should give policymakers a clearer view of whether the recent slowdown has been as notable as it looks.But Mr. Sharif said the overall takeaway was that inflation looked poised to continue its moderation.That could help to pave the path for lower interest rates from the Fed, which has projected that it could lower borrowing costs several times in 2024 after raising them to the highest level in more than 22 years in a bid to cool the economy and wrestle inflation under control.“There’s not a lot of upside risk left, in my mind,” Mr. Sharif said. More

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    Southwest Airlines Reaches Deal With Pilots Union

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    The new contract would provide raises and better benefits, following similar deals at other big airlines.Southwest Airlines and its pilots union have reached a tentative deal on a new, five-year labor contract that would raise wages 50 percent over the next several years and increase retirement benefits.The union’s board unanimously approved the deal, which it said was worth $12 billion, on Wednesday, sending it to the more than 11,000 union members, who have until Jan. 22 to cast a vote.The deal would provide benefits that are similar to those secured by pilots unions at the three other large U.S. airlines in separate negotiations this year. Pilots have had the upper hand in labor talks because they are in high demand amid the strong recovery in air travel after a steep decline in the early part of the pandemic.Capt. Casey Murray, the president of the union, the Southwest Airlines Pilots Association, said that the airline had started to lag behind its peers in attracting and keeping pilots in recent years. “What this contract was about was closing that gap so that we could recruit and retain competitively,” he said in an interview.Southwest welcomed the deal. In a statement, Adam Carlisle, vice president of labor relations for the company, said that the agreement would deliver “industry-leading” pay rates.Relations between Southwest and the union have been contentious at times. In 2021, the union sued the airline over changes made by management during the pandemic. Last year, the company and union entered federal mediation over contract talks. In May, Southwest’s pilots voted to approve a strike for the first time in the company’s history, according to the union, though federal law prohibits pilots from walking off the job without first pursuing mediation and other steps.Other pilots unions have achieved big gains. In March, pilots at Delta Air Lines approved a contract that would boost wages 34 percent over several years. Pilots at American Airlines this summer approved a contract that grants them a 46 percent raise, and pilots at United Airlines approved a 40 percent pay increase.All three contracts included improvements to vacation and retirement benefits and greater protections against last-minute reassignments. Southwest’s deal will include similar improvements. The new contracts at the big airlines have also increased pressure on smaller carriers to improve pay and benefits to keep pilots from leaving for larger employers.Pilots at big airlines easily earn six-figure salaries. The most senior pilots, who typically fly larger planes on longer routes, can earn several hundred thousand dollars a year. Labor and fuel account for about half of airlines’ operating expenses. In recent months, airline executives have warned that such costs could push down their profits.If approved, the new Southwest deal would extend through December 2028. The contracts at Delta, American and United are all in effect through at least 2026.There is no guarantee that Southwest’s pilots will approve the deal. The airline’s flight attendants rejected a deal this month, sending negotiators back to the table. Flight attendants at American and United are also negotiating new contracts. More

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    Caen las tarifas aéreas en EE. UU., para alivio de los pasajeros

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    Las aerolíneas están comenzando a ofrecer precios de rebaja, una señal de que tienen problemas para llenar los aviones.En fechas recientes en Estados Unidos, las tarifas aéreas a muchos destinos populares han caído a su nivel más bajo en meses; incluso los viajes durante la temporada festiva son mucho más baratos que el año pasado. Esto les ha dado un respiro a los consumidores, tras meses de frustración por los elevados precios de todo tipo de bienes y servicios.La abundancia de buenas ofertas hace pensar que quizá la vigorosa recuperación de la industria aérea tras la pandemia por fin va bajando el ritmo, ya que la oferta de boletos se empareja con la demanda, que parece relativamente firme, e incluso la supera en algunas rutas.Tengamos en cuenta las tarifas que consiguió hace poco Denise Diorio, maestra jubilada de Tampa, Florida. Gastó menos de 40 dólares en un boleto de ida y vuelta a Chicago y solo pagó 230 dólares por un viaje redondo de Nueva York a París, el cual planea hacer este mes.“Les he venido diciendo a todos mis amigos que si quieren ir a alguna parte, deben comprar sus boletos ahora”, comentó.Las gangas que encontró quizá sean excepcionales, pero Diorio está en lo correcto cuando asegura que hay muchas ofertas.Este mismo mes, el precio promedio de un vuelo nacional cerca del Día de Acción de Gracias estaba casi un 9 por ciento por debajo del nivel del año pasado. En cuanto a los vuelos cerca de la Navidad, eran aproximadamente un 18 por ciento más baratos, según la aplicación de reservaciones y rastreo de precios Hopper. Kayak, el motor de búsqueda de viajes, analizó un rango más amplio de fechas cerca de las fiestas y descubrió que los precios de los vuelos nacionales eran alrededor de un 18 por ciento más bajos por la fecha del Día de Acción de Gracias y un 23 por ciento por Navidad.“En muchos casos, observamos algunas de las tarifas más bajas desde que se reanudaron los viajes tras los recortes de 2020, en realidad”, afirmó Kyle Potter, editor ejecutivo del blog de viajes y servicio de alerta de ofertas Thrifty Traveler.El precio de los boletos para vuelos dentro de Estados Unidos bajó durante el verano, aseveró Potter, y en épocas recientes es más común encontrar ofertas para viajes internacionales, en particular a Europa.Las aerolíneas bajan sus tarifas cuando quieren tentar a más personas a reservar boletos porque la demanda es baja o la competencia es más fuerte. Sin duda, la competencia se ha intensificado en algunas rutas, pero los expertos en viajes indican que no hay certeza de que la demanda vaya en declive.Se espera que el Día de Acción de Gracias de este año establezca una cifra récord para los viajes aéreos, con predicciones de casi 30 millones de pasajeros, según Airlines for America, un grupo de la industria. Esta cifra sería un 9 por ciento más alta que la del año pasado y estaría un 6 por ciento por encima de la de 2019, antes de la pandemia.Pero algunas aerolíneas afirman que la demanda va en descenso en los periodos que no son de festividades o temporada alta. Además, algunos aeropuertos han manejado tal número de vuelos que las compañías de transporte se han visto obligadas a reducir las tarifas para llenar los aviones.Ese no había sido un problema durante la mayor parte del periodo de recuperación tras la pandemia. El clima y otras perturbaciones limitaron la oferta de vuelos el año pasado y en 2021, al igual que la escasez de pilotos capacitados, repuestos y aviones, entre otros factores. Esas condiciones provocaron un alza en el precio de los boletos, mantuvieron llenos los aviones y ayudaron a las aerolíneas a obtener excelentes ganancias.“La industria de la aviación nunca había registrado el tipo de márgenes de ganancias y rendimiento sobre capital visto en los últimos 2 años y medio”, señaló John Grant, principal analista de la empresa consultora y de datos de aviación OAG. “Casi estamos de nuevo en una industria más normal”.Para las principales aerolíneas estadounidenses continúan los buenos tiempos, impulsados en particular por una gran demanda de vuelos internacionales. Pero las compañías más pequeñas y de bajo costo han comenzado a sufrir. Varias revelaron resultados financieros decepcionantes para el trimestre concluido en septiembre. Los ejecutivos de esas aerolíneas han dicho que la demanda va en descenso, las tarifas han caído y los costos se han mantenido elevados. También señalan que el mal clima y la escasez de controladores de tráfico aéreo les han complicado la operación aérea.Por ejemplo, JetBlue Airways perdió 153 millones de dólares en el tercer trimestre, en contraste con las ganancias de 57 millones de dólares registradas en el mismo periodo el año pasado. La empresa indicó hace poco que planea cambiar algunos vuelos de mercados abarrotados, como Nueva York, a otros en los que espera un mejor desempeño, como el Caribe. Las compañías de transporte económicas Spirit Airlines y Frontier Airlines les informaron hace poco a los inversionistas que buscaban recortar decenas de millones de dólares en costos.La competencia ha sido aguerrida en algunos mercados importantes, lo que ha impulsado a la baja las tarifas y las utilidades.En Denver, donde se encuentran las oficinas generales de Frontier, este verano hubo un 14 por ciento más asientos disponibles que en el verano de 2019, según la proveedora de datos de aviación Cirium. Miami y Orlando, Florida, dos destinos populares a los que vuelan muchas empresas, experimentaron aumentos en capacidad todavía mayores.No obstante, mientras que las aerolíneas añadieron vuelos en mercados populares en busca de captar pasajeros, en aeropuertos de otras ciudades, como Los Ángeles, un centro de actividades de muchas aerolíneas importantes, se observaron reducciones considerables en la capacidad con respecto al verano de 2019.“Es evidente que existe una enorme correlación entre las aerolíneas que funcionan bien y aquellas que tienen dificultades, en términos de sus márgenes, cuando comparamos dónde están sus concentraciones”, señaló el mes pasado Barry Biffle, director ejecutivo de Frontier, durante una teleconferencia para presentar los resultados de la aerolínea correspondientes al tercer trimestre.En cuanto a las rutas internacionales, los analistas no saben con tanta certeza por qué las tarifas van a la baja ni si se mantendrán así. Gangas como las que consiguió Diorio para su viaje a París podrían ser señal de que las aerolíneas más grandes pronto enfrentarán presiones financieras o sencillamente que la industria va regresando a una normalidad prepandémica.“Por lo regular, la demanda de viajes a Europa baja durante el invierno”, explicó Steve Hafner, director ejecutivo de Kayak. “Así que me parece que eso refleja las tendencias normales”.Pero la demanda de viajes internacionales podría enfrentar obstáculos, en parte debido a las guerras de Medio Oriente y Ucrania. Los analistas también advierten que muchos consumidores quizá estén menos dispuestos a derrochar dinero en viajes o tengan menos posibilidades de hacerlo ahora que en los dos años pasados, cuando contaban con el dinero que habían ahorrado durante la pandemia. Incluso si la demanda se mantiene firme, las aerolíneas corren el riesgo de ofrecer demasiados asientos en rutas populares al extranjero.Cualquiera que sea la causa de la reciente caída de las tarifas, las ofertas son un bienvenido alivio para los viajeros después de sufrir años de precios altos, dijo Potter.“En cualquier caso, la receta para vuelos baratos está ahí”, afirmó. “Si se trata solo de un pequeño exceso de capacidad, es una victoria para los consumidores. Si la demanda de viajes está cayendo, en cierto modo es una ganancia aún mayor para las personas que nunca van a renunciar a viajar”.Niraj Chokshi escribe sobre la aviación, los ferrocarriles y otras industrias del transporte. Más de Niraj Chokshi More

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    Sharp Drop in Airfares Cheers Inflation-Weary Travelers

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    Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is far cheaper than it was last year, providing some welcome relief to consumers who have been frustrated for months by high prices for all manner of goods and services.The glut of deals suggests that the airline industry’s supercharged pandemic recovery may finally be slowing as the supply of tickets catches up and, on some routes, overtakes demand, which appears relatively robust.Consider the fares that Denise Diorio, a retired teacher in Tampa, Fla., recently scored. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month.“I’ve been telling all my friends, ‘If you want to go somewhere, get your tickets now,’” she said.The bargains she found may be exceptional, but Ms. Diorio is right that deals abound.Early this month, the average price for a domestic flight around Thanksgiving was down about 9 percent from a year ago. And flights around Christmas were about 18 percent cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates around the holidays and found that domestic flight prices were down about 18 percent around Thanksgiving and 23 percent around Christmas.“In a lot of cases, we’re seeing some of the lowest fares that we’ve seen really since travel started coming back after the drop-off in 2020,” said Kyle Potter, executive editor of Thrifty Traveler, a travel blog and deal-watching service.Domestic ticket prices fell over the summer, Mr. Potter said, and deals on international travel, particularly to Europe, have become more common recently.Airlines lower their fares when they are trying to get more people to book tickets as demand is slowing or they are facing stiffer competition. There’s little question that competition has intensified on some routes, but travel experts say it’s not clear whether demand is waning.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers forecast, according to Airlines for America, an industry group. That would be about 9 percent more than last year and 6 percent more than in 2019, before the pandemic.But some airlines say demand is slowing outside of holiday and other peak travel periods. In addition, some airports have been so flooded with flights that carriers have been forced to cut fares to fill planes.That hadn’t been much of a problem for most of the recovery from the pandemic. Weather and other disruptions limited the supply of flights last year and in 2021, as did shortages of trained pilots, parts and planes, among other factors. That drove up ticket prices, kept planes full and helped airlines take in strong profits.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers anticipated.Stefani Reynolds for The New York Times“The airline industry has never delivered the types of profit margins and return on capital that it has done over the last 2.5 years,” said John Grant, chief analyst with OAG, an aviation advisory and data firm. “We’re getting back to a more normal industry.”For the largest U.S. airlines, the good times have continued, fueled in particular by thriving demand for international travel. But smaller and low-fare carriers have started to suffer. Several reported disappointing financial results for the three months that ended in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flying more difficult.JetBlue Airways, for example, lost $153 million in the third quarter, compared with a $57 million profit in the same period last year. The company said recently that it was moving flights away from crowded markets, such as New York, to those where it expected stronger performance, such as the Caribbean. The budget carriers Spirit Airlines and Frontier Airlines recently told investors that they were looking to cut costs by tens of millions of dollars.Competition has been fierce in some important markets, driving down fares and profits.In Denver, where Frontier is based, about 14 percent more seats were available on flights this summer than in the summer of 2019, according to Cirium, an aviation data provider. Miami and Orlando, Fla., two popular destinations served by many budget carriers, saw even larger increases in capacity.But while airlines added flights in popular markets as they chased passengers, airports in other cities, including Los Angeles, a hub for several major airlines, had large declines in capacity from the summer of 2019.“You’ll find that there’s a large correlation between the airlines that are doing well and the ones that are struggling, margin-wise, when you compare where their concentrations are,” Barry Biffle, Frontier’s chief executive, said last month on a conference call to discuss the airline’s third-quarter results.When it comes to international routes, analysts are less certain of why fares are falling and whether they will remain low. The kinds of deals that Ms. Diorio got for her Paris trip could mean that larger airlines soon find themselves facing a financial squeeze or merely that the industry is returning to a prepandemic normal.“Historically, demand to Europe softens in the winter,” said Steve Hafner, Kayak’s chief executive. “So I think that reflects normal trends.”But demand for international travel could face challenges, partly because of the wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than they were in the last couple of years, when they had pandemic savings to draw from. Even if demand remains strong, airlines risk offering too many seats on popular overseas routes.Whatever the cause of the recent drop in fares, the deals are a welcome break to travelers from years of high prices, Mr. Potter said.“Either way the recipe is there for cheap flights,” he said. “If it’s just a little bit of overcapacity, that’s a win for consumers. If travel demand is dropping, in some ways that’s an even bigger win for people who are never going to give up on travel.” More

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    America’s Foreign Vacations Tell Us Something About the U.S. Economy

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    Prices are high, but Americans are opening their wallets for international flights and hotels. It’s the latest evidence of consumer resilience.Forget Emily. These days, a whole flood of Americans are in Paris.People spent 2020 and 2021 either cooped up at home or traveling sparingly and mostly within the continental U.S. But after Covid travel restrictions were lifted for international trips last summer, Americans are again headed overseas.While domestic leisure travel shows signs of calming — people are still vacationing in big numbers, but prices for hotels and flights are moderating as demand proves strong but not insatiable — foreign trips are snapping back with a vengeance. Americans are boarding planes and cruise ships to flock to Europe in particular, based on early data.According to estimates from AAA, international travel bookings for 2023 were up 40 percent from 2022 through May. That is still down about 2 percent from 2019, but it’s a hefty surge at a time when some travelers are being held back by long passport processing delays amid record-high applications. Tour and cruise bookings are expected to eclipse prepandemic highs, with especially strong demand for vacations to major European cities.Paris, for example, experienced a huge jump in North American tourists last year compared with 2021, according to the city’s tourism bureau. Planned air arrivals for July and August of this year climbed by another 14.4 percent — to nearly 5 percent above the 2019 level.“This year is just completely crazy,” said Steeve Calvo, a Parisian tour guide and sommelier whose company — The Americans in Paris — has been churning out visits to Normandy and French wine regions. He attributes some of the jump to a rebound from the pandemic and some to television shows and social media.“‘Emily in Paris’: I never saw so many people in Paris with red berets,” he said, noting that the signature chapeau of the popular Netflix show’s heroine started to pop up on tourists last year. Other newcomers are eager to take coveted photos for their Instagram pages.“In Versailles, the Hall of Mirrors, I call it the Hall of Selfie,” Mr. Calvo said, referring to a famous room in the palace.Robust travel booking numbers and anecdotes from tour guides align with what companies say they are experiencing: From airlines to American Express, corporate executives are reporting a lasting demand for flights and vacations.“The constructive industry backdrop is unlike anything that any of us have ever seen,” Ed Bastian, the chief executive officer at Delta Air Lines, said during a June 27 investor day. “Travel is going gangbusters, but it’s going to continue to go gangbusters because we still have an enormous amount of demand waiting.”Transportation Security Administration data shows that the daily average number of passengers who passed through U.S. airport checkpoints in June 2023 was 2.6 million, 0.5 percent above the June 2019 level, based on an analysis by Omair Sharif at Inflation Insights.And in many foreign airports, the burst of American vacationers is palpable: Customs lines are packed with U.S. tourists, from Paris’s Charles de Gaulle to London’s Heathrow. The latter saw 8 percent more traffic from North America in June 2023 than in June 2019, based on airport data.“This year is just completely crazy,” said Steeve Calvo, a tour guide in Paris.Jessica Chou for The New York Times In a weird way, the rebound in foreign travel may be taking some pressure off U.S. inflation.International flight prices, while surging for some routes, are not a big part of the U.S. Consumer Price Index, which is dominated by domestic flight prices. In fact, airfares in the inflation measure dropped sharply in June from the previous month and are down nearly 19 percent from a year ago.That is partly because fuel is cheaper and partly because airlines are getting more planes into the sky. Many pilots and air traffic controllers had been laid off or had retired, so companies struggled to keep up when demand started to recover after the initial pandemic slump, pushing prices sharply higher in 2022.“We just didn’t have enough seats to go around last year,” Mr. Sharif said, explaining that while personnel issues persist, so far this year the supply situation has been better. “Planes are still totally packed, but there are more planes.”And as people flock abroad, it is sapping some demand from hotels and tourist attractions in the United States. International tourists have yet to return to the United States in full force, so they are not entirely offsetting the wave of Americans headed overseas.Domestic travel is hardly in a free fall — July 4 weekend travel probably set new records, per AAA — but tourists are no longer so insatiable that hotels can keep raising room rates indefinitely. Prices for lodging away from home in the U.S. climbed by 4.5 percent in the year through June, which is far slower than the 25 percent annual increases hotel rooms were posting last spring. There is even elbow room at Disney World.Even if it isn’t inflationary, the jump in foreign travel does highlight something about the U.S. economy: It’s hard to keep U.S. consumers down, especially affluent ones.The Fed has been raising interest rates to cool growth since early 2022. Officials have made it more expensive to borrow money in hopes of creating a ripple effect that would cut into demand and force companies to stop lifting prices so much.Consumption has slowed amid that onslaught, but it hasn’t tanked. Fed officials have taken note, remarking at their last meeting that consumption had been “stronger than expected,” minutes showed.The resilience comes as many households remain in solid financial shape. People who travel internationally skew wealthier, and many are benefiting from a rising stock market and still-high home prices that are beginning to prove surprisingly immune to interest rate moves.Those who do not have big stock or real estate holdings are experiencing a strong job market, and some are still holding onto extra savings built up during the pandemic. And it is not just vacation destinations feeling the momentum: Consumers are still spending on a range of other services.“There’s this last blowoff of spending,” said Kathy Bostjancic, chief economist for the insurance company Nationwide Mutual.It could be that consumer resilience will help the U.S. economy avoid a recession as the Fed fights inflation. As has been the case at American hotels, demand that stabilizes without plummeting could allow for a slow and steady moderation of price increases.But if consumers remain so ravenous that companies find they can still charge more, it could prolong inflation. That’s why the Fed is keeping a close eye on spending.Ms. Bostjancic thinks consumers will pull back starting this fall. They are drawing down their savings, the labor market is cooling, and it may simply take time for the Fed’s rate increases to have their full effect. But when it comes to many types of travel, there is no end in sight yet.“Despite economic headwinds, we’re seeing very strong demand for summer leisure travel,” said Mike Daher, who leads the U.S. Transportation, Hospitality & Services practice at the consulting firm Deloitte.Mr. Daher attributes that to three driving forces. People missed trips. Social media is luring many to new places. And the advent of remote work is allowing professionals — “what we call the laptop luggers,” per Mr. Daher — to stretch out vacations by working a few days from the beach or the mountains. Mr. Calvo, the tour guide, is riding the wave, taking Americans on tours that showcase Paris’s shared history with France and driving them in minivan tours to Champagne. “I have no clue if it’s going to last,” he said. More