Skift analyzed U.S. Bureau of Labor Statistics city airfare price data, information the department gathers as part of its inflation gauge. 

Borko says domestic airfare prices heading into the summer were 5.8% lower than the same time last year, citing U.S. Bureau of Labor Statistics city airfare price data Skift analyzed. 

“This is part of a trend of ticket-price declines that has been happening for the last year, making airfares one of the few pockets of the U.S. economy experiencing sustained deflation (as opposed to lower inflation),” he says.

Online travel agent Hopper says domestic airfare during the summer is averaging about $305 per ticket, and noted this is the first time since 2020 that airfare dropped compared to the previous year.  

Airfare to Europe is down 8% versus 2023, but up 15% compared to 2019. Flight prices to Asia are up 45% versus 2019 as carriers expand capacity. Trips to Mexico and Central America are down 8% versus 2023, but remain up 6% compared to 2019, Hopper said.

Borko also noted U.S. airlines are scheduled to operate about 5.4% more domestic flights this summer than they did last year, citing data from airline planner Cirium Diio Mi.

“This extra capacity is a double-edged sword for the industry,” he says. “On the one hand it does speak to an anticipation for a robust summer by airline management teams. But airlines often overestimate passengers and grow supply faster than demand. This excess capacity is likely what is keeping domestic airline fares low relative to other products and services.”

Gas prices at the end of June were down from the month prior, with the national average around $3.56 a gallon, according to Energy Information Administration data.

WTI Crude Oil futures prices moved toward 2024 peaks entering July as summer demand picked up ahead of the Fourth of July holiday, and geopolitical concerns resurfaced. Peter McNally, global head of sector analysis at Third Bridge, says summer is often a seasonally stronger time for energy prices because of travel demand, and prices could be underpinned as gasoline inventory is at the lower end of their five-year averages. 

“There's been zero disruptions to crude oil supply that's had any lasting impact,” McNally says, although he adds that some geopolitical circumstances remain a background issue.

As gasoline demand has increased during the summer season, so has interest among gasoline traders looking to manage risk around probabilities of a sudden price shift. The RBOB Gasoline futures contract at CME Group saw open interest – or the number of open, unsettled positions – move to its highest point in more than three years in April, and interest has remained high since.

Fundamentals for the energy markets look positive with generally strong demand and a consumer that still wants to travel, says McNally. OPEC in June announced a plan to keep production cuts in place through 2025.

Refining capacity for both gasoline and jet fuel have increased over the past year, and there’s been investment in the sector. “The balance sheet of the industry is good,” he says.

The wild cards for energy prices will remain the possibility of refinery outages because of possible adverse weather impacts, and Chinese demand, as the Asian nation’s economic growth has remained lackluster the past two years.

Overall, McNally says there should be decent summer demand for energy and fuel.

“The U.S. economy has continued to surprise people to the upside for the most part. Corporate earnings have been healthy mostly. There has been some inflation in some areas, but fuel prices, aren't up any kind of meaningful amount.”