Delta Air Lines CEO Ed Bastian says airfare will come down when airlines can fly more. He is not wrong, but passengers may reasonably wonder why fares rise so quickly when costs go up and seem to fall so slowly when those costs ease.
Delta CEO Says Airfares Will Fall When Airlines Can Fly More
Delta Air Lines CEO Ed Bastian says airline ticket prices will come down when airlines are able to add more supply. My response is, “Yes, but…”
Speaking to Fox Business, Bastian was asked what it would take for airfare to fall. His answer was straightforward: more flying.
“Prices will come down when we can fly more, when there’s more supply, it’s a supply and demand. Right now we’re kind of logjammed.”
He pointed specifically to air traffic control congestion, arguing that airlines cannot simply add all the capacity they would like when the system itself is constrained.
“There’s not a lot of supply we can bring in because the air traffic control system is congested. As you open up the skies, and you bring more flow, that’s going to help bring pricing down and enable us to bring more people to more places.”
That is a fair theoretical point.
At a macro level, airline pricing is supply and demand. If flights are full and airlines cannot add more seats, fares stay high. If more seats enter the market and demand does not rise at the same pace, fares should fall.
But that is not the whole story.
Airlines Are Very Good At Raising Fares When Costs Rise
Bastian also said that fuel costs had a major impact on Delta, with rising energy prices hitting the airline’s bottom line by nearly $2 billion. He said fare increases across the industry after the Iran conflict and oil price shock were roughly 10-15%, calling that “probably the right level.”
He also noted that oil prices have since come down and said Delta is now “in a pretty good spot.”
Yes, I’m sure it is…
Airlines are quick to point to fuel when fares rise. They are less quick to point to fuel when fares should fall.
At United Airlines, CEO Scott Kirby has said that he intends to keep fares high, even if fuel drops, if conditions allow. It sounds like Bastian is saying the same thing.
To be fair, fares do move constantly. Airline pricing is not a simple surcharge that gets added and removed in a clean way. Revenue management is dynamic, demand varies by market, and not every route responds the same way. But from the passenger perspective, the pattern often feels familiar: costs go up, fares go up; costs come down, fares remain sticky.
The good news is that inflation-adjusted fares are still at historic lows compared to past decades. But the bad news is that this whole Iran conflict has shown U.S. carriers that they can raise prices and demand has held steady, begging the question…why would they lower fares?
The Air Traffic Control Argument Is Real
Bastian is certainly correct when he talks about the need to modernize air traffic control and improve the flow of air traffic.
We have seen what happens when the system is strained, though thankfully have been spared from the worst of that so far this summer. It’s true that more reliable airspace can support more flying and more flying can support lower fares.
Bastian also praised recent progress on removing bottlenecks, saying the industry has seen more movement in the last year and a half than in prior decades. I am glad to hear that, but the system still has a long way to go.
The United States should have the best air traffic control system in the world. Instead, we still have aging infrastructure, staffing shortages, and too many days where weather in one region sends delays across the country.
Investing in air traffic control is primarily about safety, but it’s also about creating functioning conduit for air travel that helps airlines be more operationally efficient. If Bastian wants to argue that better ATC flow will ultimately lower fares, I think he is right.
But Will Airlines Really Pass Savings Along?
If air traffic control constraints ease, more aircraft are delivered, fuel prices stabilize, and capacity rises, then yes, fares should moderate in markets where competition remains healthy.
But it is only competition that forces fares down and we’re seeing less competition with the folding of Spirit Airlines and cutbacks by others. If Delta can charge more for a seat because customers are willing to pay for Delta’s schedule, reliability, app, loyalty program, or premium cabin experience, it will do so. American and United would do the same.
And so it may be that if fuel drops and remains low, we still might not see airline fare retreat to Q1 2026 levels.
CONCLUSION
Ed Bastian says airline ticket prices will come down when airlines can fly more, and that requires easing air traffic control congestion and adding supply back into the system. Sure, but that is not a given in the current environment and the resiliency of U.S. carriers to pass on multiple fare increases this spring may spell bad news for U.S. flyers.
As always, we notice that fare increases tied to fuel shocks tend to arrive quickly, while fare relief after costs drop often takes longer. Lower fuel prices help airlines immediately but lower fares require competitive pressure that we might not see this year, at least not as in the past.
image: Delta
I would suggest that it’s not an increase in supply that will bring airfares down, but rather a decrease in demand. Nothing brings airfares down like empty seats.
Delta CEO essentially arguing for the easing of FAA restrictions on operations in the competition’s hubs, like SFO, ORD, and EWR. Interesting.
DL is acknowleding that increased capacity reduces fares. There is no reduction in demand and that has been proven.
and, no, DL isn’t arguing for increasing capacity at competitor hubs but across the entire US airline network. Major hubs are increasingly becoming bottlenecks. DL is in by far the the best position of US airlines in its abililty to add capacity w/o triggering greater ATC delays.
AA says its CLT, DCA and DFW hubs are its most profitable and yet DCA and DFW regularly have ATC delays.
The FAA has imposed caps on 3 of UA’s largest hubs while DEN now regularly sees ATC delays comparable to what other large airports have in multi-airport metro areas.
the US air transportation system handles more traffic than any other system in the world – even counting the EU’s as one – and also handles more general aviation traffic.
Better technology can improve the amount of traffic the system can handle but it will be years before capacity can increase because of ATC improvements
No, Tim, this is just Ed being an opportunist; he’d like further consolidation of the market to a duopoly, protected by forms of regulatory capture, and other supply constraints (lots, gates, aircraft, engines, pilots, etc.) Lately, there’s just been an attempt at sleight-of-hand with energy costs (Oh no! Oil! *doubles prices*…but never brings them down). Yet, when there’s the next downturn, Ed will be front-of-the-line begging for a bailout with no stipulations. Can we at least agree that next time taxpayers pay billions to these for-profit companies, we at least get a EU261-equivalent in-return? That’s all I ask…