Oil prices have taken a dive following the Iran agreement, but if you're hoping for cheaper plane tickets this summer, you might want to temper those expectations. According to GasBuddy analyst Patrick De Haan, the culprit is simple: demand is just too strong.
In a post on X Wednesday, De Haan explained that airlines have already trimmed and optimized their capacity to match high fuel prices and peak summer travel. That means there's little room for widespread fare cuts. He expects only a handful of deals on "less utilized routes" for now.
"A full drop in fares" is unlikely until demand eases, De Haan said, which probably won't happen until mid-to-late August. The real relief, he added, will come in the fall, "when there will be way more capacity than demand."
De Haan also highlighted a striking disparity between domestic and international fares. He noted that it's now cheaper to fly from Chicago's O'Hare International Airport to Naples, Italy, than to fly from Newark to Florida. "Prices have dropped from over $1200 to under $800," he said, sharing data on international flights to Italy.
Other analysts echo De Haan's view. Strong demand means airlines have little incentive to lower prices, even with fuel costs declining. The recent collapse of Spirit Aviation Holdings Inc. in May has also removed a major source of cheap tickets, further supporting higher fares.
Meanwhile, geopolitical uncertainty around the Strait of Hormuz is driving up shipping costs. The average cost to ship a 40-foot container from the Far East to the U.S. West Coast recently hit $4,047.
On the fuel front, oil prices continued to fall Thursday. West Texas Intermediate (WTI) crude dipped below $70 to $69.87 per barrel, while Brent crude settled at $72.98. Jet fuel was at $2.83 per gallon as of June 24, according to Airlines for America.
At the pump, the national average for a gallon of gas stood at $3.9180 on Thursday, according to AAA. Drivers in Pacific states like California and Washington are still paying over $5 per gallon.
So, if you're planning a trip, you might want to hold off until after Labor Day. The fall could bring the fare relief that summer travelers are craving.
