Up in the Air

“The impulse to travel is one of the hopeful symptoms of life.”

– Agnes Repplier

Summer is in full swing and travelers are taking to the skies in record numbers this year. According to data from Transportation Security Administration (TSA), 3 million flight passengers (seven-day daily average) stepped through TSA checkpoints earlier this month, surpassing the previous record set in late June of this year. Our chart today shows that the number of travelers through TSA checkpoints has been running above the level of the previous 5 years at almost every point in time this year and is currently almost 5% higher than the next best year which was 2023. This is an interesting tidbit of information, but why is this the case and more importantly what might this say about the US economy and consumer?

Why have US consumers been traveling so much this year? While the months of June and July typically see the largest number of travelers during a normal year, the surge in air travel this year has been strong even after accounting for seasonal strength and is likely supported by several factors. Consumers seem to be responding to cheaper prices being offered by airlines this summer. Airfares in the US are 5.1% lower year-over-year according to the Bureau of Labor Statistics. Data from the online travel agency Hopper.com shows domestic airfare for summer months (June, July and August) is averaging $305 per ticket, down 6% from this time last year.

Importantly the continued resilience of US employment as well as wage growth have both contributed to the consumption of discretionary items like travel. While we have seen cooling in US employment data, the numbers themselves are more in the realm of “just right” as opposed to being “too hot” like we have experienced for a better part of the last few years.

Lastly, consumers’ spending habits may have shifted following the lockdowns during the pandemic. Instead of spending money on discretionary goods consumers are reorienting purchases towards services, specifically travel and leisure – so called “revenge travel”. Remote work has also opened the door for employees to work in other locations. Hybrid work models make it easier to take extended weekend trips, with the option to work remotely on Friday or Monday.

While increases in unemployment and moderation in labor demand have sparked fears of a fragile consumer, we are not seeing a pullback in travel. Even though other factors may be supporting demand for airline seats, the true health of the consumer appears to be up in the air.