Holiday airfare prices are taking off

It’s that time of the year to start booking flights for the holidays—though your wallet could be in for a bumpy ride.

Airfare prices are climbing ahead of the holiday travel season, with the latest US inflation data showing a 23.4% increase in August compared to the last year.

And data from flight-tracking platform Hopper shows prices surged even higher last month. As of the last week of September:

• Domestic round-trip tickets for Thanksgiving weekend averaged $402, up 31% from last year.
• Domestic round-trip tickets for the week of Christmas averaged $452, a 23% annual increase.

Airlines aren't exactly celebrating

Despite higher ticket prices, carriers aren’t necessarily seeing major profits. Many are facing soaring operating costs, particularly for jet fuel, the second-largest expense for airlines after labor.

The Iran war and ongoing disruptions to oil shipments through the Strait of Hormuz have pushed jet fuel prices to multiyear highs around $4.00-$4.50/gallon, and could force airlines to lower their Q4 profit forecasts if prices remain elevated.

Looking ahead: Two-thirds of holiday travelers (65%) hadn't booked any travel as of late September, with 42% of respondents saying they’re waiting in hopes of lower prices, per a new TPG/YouGov survey.

But the clock is ticking: industry data shows airfares typically spike sharply once November arrives, with some advisors reportedly telling clients to book as early as mid-October this year.