Business
Airlines are going premium. Prices are rising. Will cheap tickets be harder to find?
In the midst of holiday shopping and travel, Colorado resident Tom Pipes didn’t want to spend extra money on a plane ticket. He flew from Colorado to Los Angeles on Southwest, the grandfather of budget-friendly airlines.
“If there was a first-class option, I wouldn’t use it,” Pipes said this week after arriving at Los Angeles International Airport. “I fly for the price.”
Unfortunately for Pipes and travelers like him, inexpensive tickets probably are going to become increasingly difficult to find.
Over the last year, the average cost of a domestic U.S. flight increased more than 4% to $269 in November, U.S. Bureau of Labor Statistics figures show. It is a trend line that is expected to continue as budget airlines stumble due to rising costs and a crowded field of competitors, while the industry’s major carriers press ahead with strategies focused on pricier, premium ticket options.
“You can expect to see pricing across the board firm up and move higher,” said Tom Fitzgerald, an industry analyst at TD Securities. “If you’re really price sensitive, there may not be as many deals for you.”
A traveler speaks with a Spirit Airlines agent at Hartsfield-Jackson Atlanta International Airport ahead of Memorial Day, on May 24, 2024, in Atlanta.
(Mike Stewart / Associated Press)
American, Delta and United are the world’s three largest airlines and are projected to account for 97% of the industry’s operating profit in the U.S. this year, according to a Deutsche Bank report. In an attempt to catch up, low-cost carriers are rolling out more expensive options for seats that come with perks such as early boarding and extra legroom, leaving less room on the plane for the lowest priced tickets.
Spirit, which filed for Chapter 11 bankruptcy in November, rolled out its version of first class this year. Frontier will offer a first-class option in late 2025 and JetBlue announced this month that the airline will add first-class seats to domestic flights by 2026.
“Budget airlines are trying to find ways to boost their revenue and they know that people are willing to pay more for a better product,” said Michael Linenberg, an airline equity researcher at Deutsche Bank. “The average price is going to be higher and we may see a net reduction in seats that are allocated to the lower-fare price buckets.”
As budget airlines try to recast themselves, major airlines are catering more to higher-paying travelers with premium ticketing options, which is reducing the proportion of seats in the cheapest category, industry analysts said. United, for example, offers five tiers of tickets ranging from basic economy to first-class, giving customers the option to pay more for a refundable ticket or a ticket that comes with free bags.
The price listed Thursday on United’s website for a basic economy ticket from Los Angeles to New York on Saturday, Jan. 4, was $347, which allows the traveler to carry on only one small item such as a purse. Of the nine flights from Los Angeles to New York that United operates that day, basic economy tickets were still available on only two.
For $50 more, a customer could select a seat and bring a carry-on bag, but they would have to shell out $55 more to get a fully refundable ticket. A premium economy seat on the same flight was priced at $724 and a first-class ticket cost $1,643.
Similarly, Delta offers main cabin tickets and “comfort plus” tickets, as well as an option above first class dubbed Delta One. While a first-class Delta ticket from Los Angeles to New York on Jan. 4 cost $1,059, a Delta One ticket was priced at $1,599 and comes with lie-flat seats. Spirit’s cheapest fare to New York from Los Angeles on Jan. 4 is $246, while its most expensive option is $416.
Sophy Chang, 32, recently flew Delta from New York to Los Angeles and chose the cheapest ticket option. Although her seat was toward the back of the plane, she said she was comfortable enough and grateful to be on a direct flight. She’s a regular Delta customer and said she typically has a good experience.
“I definitely wouldn’t mind extra legroom,” Chang said. “I care about it more on longer flights.”
A woman waits for her flight as an American Airlines jet passes by at Sky Harbor airport in Phoenix in 2023.
(Charlie Riedel / Associated Press)
Further widening the gap that has developed in the industry are conveniences and high-end perks offered by larger carriers that budget airlines can’t match. Low-cost carriers have fewer direct flights to fewer destinations and lack the luxurious airport lounges that other first-class travelers have access to.
Delta recently completed a renovation of its two terminals at Los Angeles International Airport, including the addition of a Delta One lounge with private check-in and fine dining options. By the end of the year, Delta plans to offer customers more than 700,000 square feet of lounge space across 56 Sky Clubs and three Delta One lounges.
“Demand for travel on Delta remains healthy with continued preference for our premium offerings,” said Delta President Glen Hauenstein during the company’s most recent earnings call. “Our new Delta One lounges in New York and L.A. with dedicated check-in and private TSA security truly differentiate Delta’s premium offering.”
So far this year, 57% of Delta’s revenue has been generated through sales other than main cabin tickets, Hauenstein said. The focus on higher-priced tickets reflects changes in consumer preferences, including a post-pandemic shift toward spending on experiences over tangible goods, experts said.
“Since COVID-19, there are more people not wanting a miserable travel experience who are willing to pay more for a more comfortable journey,” Fitzgerald said. “It’s been an arms race for the airlines to offer more of a premium product.”
No-frills airlines that lack these perks are built to have lower ticket prices than the major carriers, but rising operating costs have made that difficult to achieve. Budget airlines need to pay the same prices for airport space, jet fuel and labor as the big players do, said Mike Boyd of Boyd Group International, an aviation consulting firm.
“The pilot flying for Frontier, he or she wants the same money that the American Airlines pilot is getting because they’re flying the same airplanes,” Boyd said.
Budget airlines are also struggling in part because there are too many of them, including six publicly traded carriers such as Allegiant and Sun Country, Deutsche Bank’s Linenberg said. The companies will have to consolidate in order to survive, leaving fewer ticket options for customers.
“Many of them are losing money because they’re all competing with each other for that same price-sensitive customer,” Linenberg said. “Part of the industry is going to restructure, and at the end of the day, the consumer will be facing higher fares.”
According to a Deloitte holiday travel survey, 49% of Americans plan to travel between Thanksgiving and mid-January. That number jumps to 66% among those with household incomes of $100,000 or higher, and falls to 34% among those who make $50,000 or less. Twenty-nine percent of travelers this holiday season will upgrade their airfare this year compared with the type of ticket they purchased last year.
There will always be a market for low-fare tickets, but prices may never return to pre-pandemic levels, according to Fitzgerald at TD Securities.
“There were good days of bargains that people were used to over the 2010s,” he said. “I don’t think those are coming back anytime soon.”
Early in April, Ruben Hallali got an unusual alert on his phone: The evening temperature at Paris Charles de Gaulle International Airport had jumped about 6 degrees Fahrenheit in seconds.
Mr. Hallali, the chief executive of the weather risk company Sereno, had set up notifications for extreme weather swings. Then, nine days later, it happened again.
“It was an isolated jump, at one single station, early in the evening,” said Mr. Hallali, who added that he noticed another strange coincidence about the spikes: The timing was just right for somebody to reap a windfall on the betting site Polymarket.
He wasn’t the only one who sensed a problem. Météo-France, the country’s national meteorological service, filed a complaint last week with the police and local prosecutors, saying it had evidence that a weather sensor at Charles de Gaulle, the country’s largest airport, may have been tampered with.
The temperature swings, experts said, coincided with a period of unusual activity on Polymarket, one of the leading online prediction markets, which allow users to wager on the outcome of virtually anything.
One increasingly popular area is weather betting, where speculators can make real-time wagers on temperature readings, rainfall totals, the number of Atlantic hurricanes in a year and much more — with payouts in the thousands of dollars and higher.
As the stakes rise, so has the temptation to tamper with the instruments used to generate weather readings in hopes of engineering a lucrative outcome. Experts warn that this could have dangerous ripple effects, like degrading the information that underpins safe air travel.
Temperature data is used in a host of calculations at airports, helping determine correct takeoff distance, climb rate and whether crews need to apply frost treatment to planes. It’s crucial to airport safety, Mr. Hallali said.
“The Charles de Gaulle incident is not an isolated curiosity,” Mr. Hallali said. “It is what happens when financial incentives meet fragile data infrastructure.”
On April 6, the temperature reading at Charles de Gaulle jumped from 64 degrees Fahrenheit to 70 degrees at 7 p.m., before slowly falling over the next hour, according to data from Météo-France.
On April 15, the recorded temperature climbed even more sharply, from 61 degrees at 9 p.m. to 72 at 9:30 p.m., then dropping back to 61 a half-hour later.
In both instances, the spikes set the high temperature for the day, the metric on which some Polymarket wagers rest.
Laurent Becler, a spokesman for Météo-France, said the service contacted the police after noticing the discrepancies in temperature data. He declined to comment further on the case, saying it was under investigation.
Mr. Hallali said that after the first instance, experts and commenters on the French weather forum Infoclimat began to search answers. Theories were floated, including user error. But after the second spike, commenters zeroed in on the unusual Polymarket wagers, which totaled nearly $1.4 million over the two days, according to the company’s data.
The sums bet on April 6 and 15 were hundreds of thousands of dollars higher than on typical days this month.
It is not the first time that strange bets on prediction markets have raised accusations of insider trading.
On Thursday, a U.S. Army special forces soldier who helped capture President Nicolás Maduro of Venezuela in January was charged with using classified information to bet on outcomes related to Venezuela, making more than $400,000 on Polymarket. Late last year, another trader on the site made roughly $300,000 betting on last-minute pardons from President Joseph R. Biden Jr. before he left office.
Polymarket did not immediately respond to a request for comment. While the site used to tie some bets to temperature readings at Charles de Gaulle, this week, after Météo-France filed its complaint, the platform began using temperatures taken at another airport near the city, Paris-Le Bourget, according to recent bets on the site.
Representatives for Charles de Gaulle airport declined to comment beyond saying that the case was under investigation. The airport police also declined to comment. The Bobigny Public Prosecutor’s Office, which is handling the case, declined to answer questions about the investigation but said that no complaint had been filed against Polymarket.
As to how the instruments could have been tampered with, a number of theories have been offered online, including by use of a hair dryer or a lighter. Mr. Hallali said that the precision of the spike on April 15 suggested the use of a calibrated portable heating device, although he declined to speculate about what kind.
“Markets are expanding into every domain where an outcome can be observed, measured, and settled,” he said. “As these markets multiply, so does the surface area for manipulation.”
As the war in Iran strangles the flow of oil around the globe, California’s jet fuel reservoirs are running low.
The state — which refines much of its own fuel in El Segundo and elsewhere but still relies on crude oil imports — has seen its jet fuel stock decline by more than 25% from last year’s peak to a level not seen since 2023, according to data from the California Energy Commission.
The supply is shrinking as a global shortage is already affecting travelers’ summer plans with canceled flights and higher fares. It could even affect plans for people coming to Los Angeles for the 2026 World Cup, which starts in June, said Mike Duignan, a hospitality expert and professor at Paris 1 Panthéon-Sorbonne University.
“People don’t know exactly how this is going to escalate,” he said. “There’s a huge black cloud over the sea for the World Cup and the travel slump that we’re seeing is all linked to this oil shortage.”
As fuel supplies shrink, flight prices are rising. Airlines are adding baggage surcharges to cover fuel costs. Several routes leaving from smaller California hubs, including Sacramento and Burbank, have already been canceled.
Air Canada has suspended flights for this summer, cutting routes from JFK to Toronto and Montreal.
“Jet fuel prices have doubled since the start of the Iran conflict, affecting some lower profitability routes and flights which now are no longer economically feasible,” the airline said in a statement last week.
Europe had just more than a month’s supply of jet fuel left last week, the International Energy Agency said. In an effort to cut costs, the German airline Lufthansa slashed 20,000 flights from its summer schedule this week.
Without a fresh oil supply flowing through the Strait of Hormuz, the situation is unlikely to improve, experts said. The oil reserves countries and companies have in storage are helping fill shortfalls, but the squeezed supply chain could still wreak economic havoc.
“When there’s a shortage somewhere, everything is affected,” said Alan Fyall, an associate dean of the University of Central Florida Rosen College of Hospitality Management. “Airlines are being cautious, and I would say that is a very wise strategy at the moment.”
California’s jet fuel stock reached its lowest levels in two and a half years at 2.6 million barrels last week, down from a peak of more than 3.5 million barrels last year.
The California Energy Commission, which tracks fuel inventory, said the state’s current jet fuel stock is sill sufficient.
“Current production and inventory levels of jet fuel are within historical ranges,” a spokesperson said. “Although supply is tight, no structural deficit has emerged yet. The present tightness reflects short‑term global market stress. As long as refinery operations remain stable, California is positioned to meet regional jet fuel needs.”
Europe has been affected more directly because it relies on the Middle East for the vast majority of its crude oil and many refined products, experts said. California gets crude oil from the Middle East but also from Canada, Argentina and Guyana.
The state has the capacity to refine around 200,000 barrels of jet fuel per day, most of it from refineries in El Segundo and Richmond.
The amount of crude oil originating in the state has been declining since the early 2000s, as state regulations and drilling costs have led to more imports.
California has become particularly vulnerable to supply-chain shocks like the war in Iran, says Chevron, one of the companies that provides jet fuel in the state.
“The conflict in the Mideast Gulf has exposed the danger of California’s decision to offshore energy production,” said Ross Allen, a Chevron spokesperson. “Taxes, red tape and burdensome regulations cost the state nearly 18% of its refinery capacity in just the past year, and we urge policymakers to protect the remaining manufacturing capacity.”
In 2025, 61% of crude oil supply to California’s refineries came from foreign sources, according to the California Energy Commission. Around 23% came from inside the state, down from 35% five years ago.
The state’s refining capacity has also been declining, said Jesus David, senior vice president of Energy at IIR Energy. The West Coast region’s refining capacity has decreased from 2.9 million to 2.3 million barrels a day since 2019, he said.
“California’s had issues prior to the war,” David said. “Nothing new has been built over the past 30 years, and California has closed a lot of capacity.”
The result is higher prices for both gasoline and jet fuel in the state. Jet fuel at LAX costs close to $15 per gallon this week, compared with almost $10 at Denver International Airport and $11 at Newark International Airport.
Gasoline prices have also been hit hard by the global conflict. Average gas prices in California are close to $6 a gallon, around $2 higher than the national average.
The West Coast is a “fuel island” because it’s not connected by pipelines to the rest of the country, United Airlines chief executive Scott Kirby said in an interview last month. That means oil and refined products have to be brought in by ships.
“Fuel price is more susceptible to supply weakness on the West Coast than anywhere else in the country,” Kirby said.
Some airlines might not survive the turmoil if oil prices don’t level out soon, he said. Spirit Airlines, a budget carrier based in Florida, is reportedly facing imminent liquidation if it isn’t bailed out by the Trump administration.
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
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