High fuel prices test limits of summer vacation spending

Key Points:

• Domestic round-trip airfares averaged $623 in April, the highest in nearly four years, driven by a doubling of jet fuel prices following geopolitical tensions involving Iran and disruptions in a key shipping channel.
• Airlines are passing increased fuel costs onto consumers and reducing flight frequencies on certain routes, leading to fewer available seats and potentially higher prices; Spirit Airlines recently shut down partly due to high fuel costs, removing a major low-fare competitor.
• Despite rising prices, leisure travel demand remains relatively high, with airlines optimistic about summer bookings boosted by events like the FIFA World Cup and major concerts; United and American Airlines forecast record or near-record passenger numbers this summer.
• Road trip growth is minimal, with AAA projecting only a 0.1% increase in drivers over Memorial Day weekend compared to last year, amid gasoline prices averaging $4.48 per gallon and potentially rising to $4.80 if the Strait of Hormuz remains closed.
• Travel experts advise flexibility in travel dates and destinations to find deals, recommending midweek flights and the use of frequent flyer miles or credit card points now before potential devaluation.