Key insights
- Rising airfare and gas prices, exacerbated by the Iran war, are disproportionately impacting lower-income households, leading to reduced travel spending. This divergence in consumer behavior, with wealthier households maintaining travel plans, reflects a broader K-shaped economic trend. Reduced travel and tourism spending among lower-income groups could signal a weakening consumer discretionary sector, posing a slight bearish influence on US equities.
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The summer travel season is splitting along income lines, with wealthier households still booking flights while lower earners pull back.
Lower-income households are more than twice as likely as wealthier ones to skip a summer trip this year, according to a Bank of America Institute report out Wednesday. Yet about 30% of Americans say higher gas prices won't change their plans at all.
The split echoes the K-shape economists use to describe a broad divergence in consumer spending, where higher earners are spending even more while lower earners retrench.
The Iran war has driven up airfare and gas prices, and the increases are hitting lower-income households hardest, with reduced spending on flights, hotels and tourism.
Travelers are facing a big increase costs owing to the Iran war, which has disrupted global oil supplies and sent fuel prices soaring. Regular gas is now averaging $4.51 a gallon, up from $2.98 before the conflict began in late February, according to AAA data. Jet fuel has surged about 62% over the period, prompting airlines to pass on costs to customers.
Airfares in April were 21% higher than a year earlier, the Bureau of Labor Statistics said Tuesday. Airlines have also lifted baggage fees and trimmed schedules, and relief isn't likely soon: the Airports Council International warned Wednesday that summer flights face further disruption if fuel costs stay elevated.
The cost increases aren't hitting all travelers the same way. About 38% of lower-income households told Bank of America they have no summer travel plans, more than five times the share among higher-income earners.
Spending by lower-income households on airlines, lodging and tourism was lower through April than a year ago. Cruise spending was the lone exception, as spending increased across income groups.
For those traveling like nothing has changed, timing is likely part of the explanation: many locked in plans before the spring oil shock hit ticket prices. About 47% of survey respondents had already booked a summer trip by early April, up from 38% in 2025.
Larger tax refunds from the One Big Beautiful Bill Act gave many households extra cash this year, the report said, much of it spent on airline tickets and hotel bookings.
Those who are flying are sticking to familiar routes.
Florida overtook California as the top domestic destination so far in 2026, with Texas and New York third and fourth, according to Bank of America transaction data for travel more than 500 miles from home.
Internationally, Mexico was the top destination through the first four months of 2026, followed by Canada, the United Kingdom, France and Italy. Among Americans planning to travel this summer, 24% say they're heading to Europe, up from 14% in 2025 in 2024.
The FIFA World Cup is also drawing travel to host cities across the U.S., Canada and Mexico, with about 40% of survey respondents planning a trip tied to the tournament.
But across incomes, Americans aren't splurging. Just 4% told Bank of America they're prioritizing premium experiences regardless of cost, a figure that doesn't shift across income tiers and age groups.
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