The collapse of Spirit Airlines, high fuel prices, limits on the cost of summer vacation airfare

High gas prices are testing how badly consumers want to travel this summer, whether it’s flying or driving.

The cost of flights has never been so high since May 2022, when airlines are out of the pandemic due to a lack of aircraft and staff to deal with the crowds of buyers who are ready for “revenge trips.” Gasoline is more than $4 a gallon and could approach $5 a gallon this summer, AAA warned this week.

Jet fuel prices doubled in less than three months this year after the US and Israel attacked Iran, triggering a conflict that left a key shipping port effectively shut down.

Round-trip airfares in April averaged $623, the highest figure in four years, according to data from the Airlines Reporting Corporation, which tracks travel agency ticket sales. Jet fuel is the second-largest airline expense after labor, and carriers say they are increasingly passing that cost on to customers.

Separately, airlines are also scaling back their growth plans due to higher fuel costs. Even if the route isn’t canceled, fewer flights on certain routes means customers will have fewer seats to choose from and, with strong demand, that could drive up prices even more.

Spirit Airlines, the most popular budget carrier in the US, was shut down earlier this month, and partially blamed skyrocketing jet fuel prices for its failure to emerge from near-consecutive bankruptcy. It was the largest US airline in decades. Other airlines swooped in and snapped up those customers after that, but the carrier’s demise removes a major tester of low fares.

Fuel hikes have set the stage for higher fares and more expensive gas station visits this summer. The start of the peak travel season on Memorial Day weekend will be a taste of how much travelers will shell out to fly while everything from shopping to clothing has become more expensive this year.

The Transportation Security Administration said it expects to screen 18.3 million people between Thursday and next Wednesday, compared to 18.5 million it saw in the same period last year.

Road trips won’t be cheap either. AAA this week predicts 39.1 million people will drive at least 50 miles between Thursday and Monday, up 0.1% from last Memorial Day weekend. That was the smallest increase in a decade, AAA told CNBC.

Gas price site GasBuddy predicted this week that prices across the US will be $4.48 on Memorial Day, up from $3.14 last year, and that prices could reach $4.80 on Labor Day “if the Strait of Hormuz remains closed for most of the summer.”

Leisure travel intentions in the US fell slightly in March – 82.8% compared to 83.1% in the same month last year – although they remained very high, UBS said in a note on Monday.

“We believe the year-over-year moderation in travel intentions this year is due to increased jet fuel and other geopolitical concerns,” UBS aviation analyst Atul Maheswari wrote. He added that the intention to travel is close to the highest point in the last nine years.

So far, airline executives said, customers are still making reservations, and executives are optimistic about the summer travel season. They also said that they expect an increase in the FIFA World Cup, which will be held in June and July in the US, Canada and Mexico, and in large concerts such as Harry Styles’ venues in Amsterdam and London this summer.

United Airlines said it expects to carry 53 million travelers between June and August, an increase of three million people from last year. American Airlines has predicted 75 million customers between May 21 and September 8, after Labor Day, surpassing its previous record, in 2019.

Airlines have been trimming their schedules and operating unprofitable or unprofitable routes but were eager to fill the gaps after Spirit’s collapse.

Travelers can still find deals if they’re flexible, says Kyle Potter, who runs the Thrifty Traveler website. He recommended using tools such as the “Explorer” tool in Google Flights that allow users to view destinations by trip length and month on a map view.

He also suggested that fliers consider traveling on Tuesdays or Wednesdays, when fares and traffic are generally lower.

“That, in most cases, can save you hundreds of dollars per ticket, and that’s multiplied by a family of four,” he said.

He had a simple message for travelers sitting on high flyer miles.

“Now is the time to use your miles or your credit card points or both,” he warns, warning that miles may eventually decrease. “What are you waiting for? I think a lot of people are saving their miles because they want to go to Europe in 2027.”

– CNBC’s Contessa Brewer contributed to this report.