Key insights
- Bank of America data indicates a slowdown in air travel due to rising ticket prices and geopolitical uncertainty. This suggests potential weakness in discretionary spending for April, following a strong March. Delta's strategy to maintain high prices despite potential fuel cost decreases adds to concerns about consumer sensitivity to airfare costs.
If you're using airlines as a forward economic indicator, the warning alarm is going off.
Weakness in air travel emerges: Air travel traffic has slowed substantially as consumers face higher ticket prices and baggage fees since the start of Operation Epic Fury, according to new data from Bank of America. In recent days, traffic has fallen below its 2024 and 2025 levels (see chart below).
"Since air tickets tend to be purchased on average six weeks before travel, we think the slowdown is likely due to the impact of the Iran war on not only airfares but also confidence," BofA economist Aditya Bhave wrote. "News reports of long security lines and flight delays due to TSA disruptions might also be weighing on consumers' willingness to fly. The implication is that discretionary services spending will probably be soft in April, after a strong March."
Read more: Your flight is about to get more expensive. These tips could save you.
By the numbers: The cost of jet fuel, which makes up about 25% to 30% of airlines' costs, has risen sharply since the start of the war in late February.
As of April 13, the average domestic round-trip flight cost $358, up 18% — or about $55 — from last year, according to travel booking site Kayak. International flights have also gotten pricier. Kayak data shows the cost of a round-trip economy flight from the US to foreign destinations has risen by an average of $115, to $1,064, compared to last year.
What one airline executive said: Delta (DAL) CEO Ed Bastian has been under fire since he hinted on an earnings call this month that he is in no rush to lower airfare prices if jet fuel prices retrench. Bastian said the airline would aim to "retain any of the pricing strength" gained during the conflict.
Delta has recently increased baggage fees, with fees for travelers' first and second checked bags rising by $10 to $55 each. Prices for third checked bags have increased by $50 to $200.
The bottom line: The US consumers have shown remarkable resilience as higher prices from the war have started to seep into their everyday lives. Clearly, the record-setting stock market has shrugged off any concerns of a consumer pullback.
But consumers aren't idiots, and they could be approaching the point where they rein in their spending until more normal prices emerge. Be on the lookout for this in the coming economic data.
Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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