"Today Is the Cheapest" Soaring US Airfare, Koreans Giving Up Trips to Korea [Correspondent Diary]

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] "Today is the cheapest."

This is neither about house prices nor luxury goods prices. It is a comment on a post in a travel cafe bulletin board where someone hesitates whether to immediately purchase an expensive airline ticket far exceeding their initial budget or wait for the price to drop.

Since the COVID-19 pandemic, pent-up travel and business trip demand has exploded, causing recent airline ticket prices to soar. In New York, one of the world's top tourist destinations, round-trip airfare to Korea on national carriers Korean Air and Asiana Airlines in economy class now approaches $3,000 (about 3.8 million KRW), double the price compared to 2019 before the pandemic.

The increase in business class ticket prices, which were hard to find even during the pandemic, is even more astonishing. A resident expatriate in New York recently checked flights for a company meeting and was told they would have to pay between $10,000 and $15,000 (12.69 million to 19.03 million KRW) for business class. A woman in her 30s staying temporarily in the area also inquired about changing her schedule for an early return and was asked to pay over 1 million KRW more.

Given these circumstances, many Koreans living in New York and New Jersey are postponing their plans to visit Korea altogether. One Korean said, "I was going to go this spring but postponed due to the spread of COVID-19 in Korea, and now the airfare is too burdensome," sighing. Another Korean who planned to visit Seoul with family during this year's Chuseok holiday shook their head, saying, "I should have booked the flight earlier."

This is the aftermath of the easing of COVID-19 restrictions, which has led to a global explosion in travel and business trip demand. The reduced number of flights during the pandemic has not kept up with demand, causing ticket prices to surge. According to Mastercard Economics Institute's "Travel 2022" report, global flight bookings for travel purposes increased by 25% last month compared to pre-pandemic levels, confirming the recovery of travel demand worldwide.

Companies feeling the limitations of remote communication are traveling abroad more actively, significantly increasing business trips. American Express Global Business Travel (Amex GBT), the industry leader, recently announced that corporate travel bookings have recovered to 61% of pre-COVID-19 levels. Considering it was 25% during the early Omicron spread, this is a significant recovery.

It's not just international flights. Domestic airfares in the U.S. are also soaring. The increase in airfare in April set a record for the highest monthly rise ever. According to the Financial Times (FT), U.S. airfare in April rose 18.6% compared to the previous month, the largest monthly increase since the Consumer Price Index (CPI) began being compiled. Compared to the same period last year, it jumped 33.3%. This is remarkable even considering that U.S. inflation recently reached its highest level in over 40 years.

Economic media CNBC reported the case of Dejiri Anderson, who paid $685 for a round-trip economy ticket from Los Angeles to Philadelphia, noting that the same route previously cost $320. Anderson remarked, "At this price ($685), I should be able to buy an international ticket."

Henry Hartvelt, an analyst at Atmosphere Research Group, analyzed, "Domestic travel demand in the U.S. is surging, but the number of seats is still 6% lower than before the pandemic." He said the burden of high fuel prices is not only on consumers but also on airlines, with increased jet fuel costs, labor shortages, and high labor costs all contributing to rising ticket prices. In other words, "the market is functioning as it should."

Experts say it is still uncertain whether this strong airline demand in major regions will continue throughout the year or decline, as concerns about a resurgence of COVID-19 remain. Mastercard Economics Institute also pointed out that most people tend to reduce travel expenses when inflation in energy, food, and other costs surges. However, considering the pent-up travel and business demand over the past two years, many are expected to "buy tickets even if they are expensive."

The Korean government recently announced measures to significantly increase international flights. The plan aims to stabilize airfare prices and respond to the surge in demand. However, it remains uncertain how much airlines will actually increase flights contrary to the plan. Ultimately, it is expected to take considerable time for fares to come down once they have risen.

CNBC advised those burdened by expensive tickets to be even more flexible than before the pandemic when trying to save costs on travel. Scott Keyes, founder of Scott's Cheap Flights, recommended postponing travel if possible. He added, "For domestic travel, flights should be booked 1 to 3 months in advance, and for international travel, 2 to 8 months ahead."