Airfare Prices Expected to Remain High, Southwest CEO Says

CEO Robert Jordan said the higher costs were due to continued high demand.

Travelers walk through the airport terminal at Ronald Reagan Washington National Airport in Arlington, Virginia, on December 22, 2016, ahead of the Christmas holiday.

Saul Loeb/Getty Images

Airfare prices have been increasing lately, and the CEO of Southwest Airlines said that’s not likely to change anytime soon.

CEO Robert Jordan, who officially took the helm of the company in February, pointed to issues like higher prices, increased wages, and fuel problems, but said demand remains high during the company's second quarter earnings call, according to the TheStreet, leading to a continuation of higher costs.

"Looking forward, demand continues to be strong," Jordan said. "We continue to experience both inflationary pressures and headwinds from lower productivity and efficiency."

"Consumer and business sentiment is down, and there are data points out there that could indicate early signs of a slowdown," he added. "But so far, demand remains strong, and we haven't seen material impacts to our business. As always, we'll continue to monitor the environment and be ready to respond if needed."

A bright spot for Southwest is its staffing levels, and Jordan said the airline has met its goals.

"I'm really proud to report that we reached pre-pandemic staffing levels in May 2022, which is just a huge milestone. We continue hiring in specific areas, particularly for pilots, and we expect to add over 10,000 employees this year out of attrition," Jordan said. "We are benefiting from getting better staffed, getting new employees through training and on the front line, adding more short-haul flying to provide better network stability, and adding more flying between crew bases.” 

He added: “We know that we've got work to do on the efficiency side as we focus on 2023, and we're laser-focused on walking down fleet and capacity plans, moderating our overall hiring, optimizing staffing to flight schedules, ringing out cost inefficiencies and returning to our historic efficiency levels by the end of next year.”

Overall, airline prices have jumped more than 42% in the past year in the United States, according to the U.S. Bureau of Labor Statistics’ latest Consumer Price Index. And following a few months of incremental declines, airfare rose 0.8% from August to September.

Gas prices have also risen 18.2% from September 2021 to September 2022.

The cost of flying is expected to continue to be a factor over the holiday period as experts have predicted holiday prices will reach the highest they’ve been in five years, especially over Christmas.

Travelers who are hoping to book a vacation and save some money should think about purchasing their tickets on a Sunday when they could save an average of 5% on domestic flights and up to 15% on international airfare.

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