Airfares increased by 4% in July, reversing a prior slump, as airlines cut flights to address a capacity glut while demand rebounded. Domestic capacity among U.S. airlines fell by 6% in August compared to July, demonstrating aggressive reductions in flight offerings. Earlier issues, stemming from President Trump's trade war, had led to lower demand and temporarily reduced prices. The ongoing strike at Air Canada may further impact capacity, while increasing airport security screenings suggest a recovery in travel demand and consumer confidence.
The latest consumer price index report showed airfares jumped 4% in July from the prior month, reversing a slump that began early this year.
Airlines are trimming flights more aggressively than usual as the summer winds down, with domestic capacity among U.S. airlines dropping 6% in August.
Earlier this summer, airlines found themselves with too much capacity as their expectations for another travel boom slammed into President Donald Trump's trade war.
Demand is rebounding as airlines reported increases in security screenings at airports, indicating a recovery in consumer confidence and travel willingness.
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