Travel Spending Holds Up as Airfare Jumps 27% and Demand Splits

The February snapshot that didn't last

In late February, card-transaction data seemed to show a clear pattern. Americans were spending more on travel, but they were paying less each time they booked. Attain's data for the first seven weeks of 2026 showed travel spending up year over year in every category. Airline spending per consumer rose 14% to $346, rental cars rose 14% to $504, and a catch-all "other travel" category jumped 17% to $324.12 Attain also found that average transaction sizes had fallen in most categories through 2025, even as total spending grew. Its reading was that people were taking more trips, paying less per booking and hunting hard for value.12

That reading was reasonable at the time, and the forecasts backed it up. In January, Kayak said searches were rising and fares were falling. It put summer international fares down about 10% and domestic fares down 3%, with fares to Europe down 14%.10 Going said that, adjusted for inflation, June 2025 was the second-cheapest month for airfare on record, and it expected 2026 to bring just as many deals.11 IATA projected 5.2 billion air travelers for the year, up 4.4%.10

Eight months later, half of that story still holds. Demand held up all year. Cheap flying did not. Fares rose sharply after February, and the value-seeking Attain spotted turned into something harsher: a split between travelers who could absorb the higher prices and those who couldn't.

The fuel shock reversed the airfare trend

The turning point was geopolitical. Reuters linked the run-up in fuel costs to the U.S. war on Iran, which began in late February.4 Kiplinger cited Reuters reporting that jet fuel had gone from roughly $85–$90 a barrel to as much as $150–$200.13 United said fares might need to rise 15% to 20% to cover the higher fuel bill.15

The price data turned quickly. The consumer price index showed airline fares up 14.9% year over year in March.15 Fares were up more than 20% in April.4 Federal data for May showed them up 26.7% from a year earlier and nearly 3% from April alone.3 Summer search data from Points Path showed domestic cash fares up about 15% and international fares up 12% for travel between June 1 and September 20.1 By September, The Points Guy said summer fares had run as much as 27% above the previous summer.14

The pressure has carried into the holidays. Hopper's 2026 Holiday Travel Index puts domestic round-trip Thanksgiving fares at an average of $402, up 31% from last year, and Christmas fares at $452, up 23%. That makes this the most expensive holiday airfare in a decade.17 Points Path's estimates are somewhat lower, with Thanksgiving fares up 9% to 13% and Christmas up 12% to 18%.14 The numbers differ, but every source agrees fares are higher.

Airlines did more than pass along fuel costs. They scaled back planned summer capacity growth and raised checked-bag fees, citing fuel.1 Kiplinger also reported that carriers are releasing fewer discounted seats and selling them out faster.13 With fewer seats and full planes, airlines had little reason to cut prices. Points Path founder Julian Kheel said carriers were not worried about travelers staying home.1 Southwest CEO Bob Jordan called the fare increases since February the biggest he could remember in 38 years in the industry.2

Demand held, and the industry's forecasts say so

What stands out is how little the higher prices dented total spending. In May, the U.S. Travel Association projected record travel spending of $1.37 trillion for 2026, rising to $1.42 trillion in 2027, in inflation-adjusted dollars.22 The pace is modest: 1% real growth this year, picking up to 3% in 2027 and 2028.21 Domestic travel makes up 87% of the total. Domestic leisure, projected at $909 billion, is the only segment above its 2019 level in real terms.22

International inbound travel is weaker. It fell 2.4% in 2025 and is expected to grow 1.6% to $178 billion in 2026, which is still 18% below 2019.21 Visits are projected to rise 3.4% to 70.6 million, helped by the World Cup, but the 2019 level isn't expected to return until 2029.25 Business travel is forecast to grow only 0.7%.21 The association named its own risks: high energy prices, a long Middle East conflict and weak consumer sentiment.21

Europe showed the same resilience. RateGain and Sojern reported that hotel and flight bookings rose this summer compared with the previous two summers, with flight demand up 5% year over year.9 A Sojern executive said travelers kept moving and adjusted where they went, how long they stayed and how they booked.9

Hotel rates rose more slowly, and not everywhere

Room rates rose, but far less than airfares. The New York Times reported hotel rates up about 5% from a year earlier in May and suggested World Cup demand may have contributed.3 GBTA and ALTOUR forecasts project global average daily rates rising 3.7% to $168.5 In Europe, average daily rates rose 4% to 6% year over year.9

The averages hide a split. Reuters reported softening demand for economy hotels, with some operators discounting to fill rooms, while higher-end hotels kept growing.4 Hotel Dive noted that U.S. World Cup bookings were running below early projections.23 The pattern is the same as in airlines: the low end is wobbling and the high end is holding up.

Where the reporting disagrees: who is trading down

The biggest disagreement among the reports is about which travelers are economizing. Attain's February data suggested that higher earners were trading down. It found that $100,000-plus households spent $399 on average per airline ticket, slightly less than the $412 spent by middle-income travelers. Attain read that as wealthier travelers choosing economy seats or flying less than their incomes would predict.12

The reporting from the summer points the other way. American Airlines CEO Robert Isom said there was "no doubt" demand had become K-shaped, with higher-income travelers growing faster than everyone else.4 Premium-cabin fares rose only about 7%, compared with steep increases in economy. That made upgrades relatively cheaper for affluent flyers, while price increases landed hardest on the back of the plane.41 Deloitte's summer survey found that only 45% of Americans had made summer travel plans, the lowest share in six years. Middle-income households earning $100,000 to $199,000 fell the most, from 45% to 37%.4 Households earning over $100,000 grew from 50% to 55% of all U.S. travelers.29 The share of travelers increasing budgets for their biggest trip rose to 24% from 19%.18 Deloitte said travelers who still go are largely unwilling to make big compromises.18

The two pictures fit together best as a sequence. Attain measured a market of falling fares, where buying cheaper tickets cost travelers little. Once fares rose, saving money meant staying home or picking a closer destination, not hunting for a lower ticket price. InteleTravel data showed outbound international summer bookings down a quarter, with economy travelers shifting to domestic trips and cruises.4 The U.S. Travel Association expects people to move toward shorter, cheaper trips, including regional and drive-to destinations.21

What it means

The February headline got the most important thing right: travel demand is sticky. Americans kept treating trips as close to essential, and total spending reached a record even with fares up more than a quarter.223 What changed is how that demand plays out. Attain saw broad-based value hunting, with many people buying cheaper fares more often. By summer, a shrinking group of mostly affluent travelers was paying more, while many middle-income households postponed or cancelled trips.24

That matters for how strong the boom really is. When higher prices sustain spending while fewer people travel, the industry depends heavily on the 45% of households still booking and on fuel prices that are outside its control.421 Travelers deciding on Thanksgiving and Christmas trips are paying the highest holiday fares in a decade.17 The industry calls 2026 a resilient year, and the spending numbers back that up. The participation numbers show a more fragile market.