Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of a Flight
Transcript
- Lucas: So I booked a flight last night — roundtrip from Chicago to Phoenix — and it cost me one hundred and seventy-nine dollars. For a July departure. That's less than what I paid for a similar ticket two years ago, and it got me thinking: airfare might actually be one of those rare categories where your raise is finally winning. Luna: Really? Because every time I look at airline stocks, they're still reporting healthy revenue. But the price per seat definitely feels lower than it did in 2023 or 2024. Lucas: Exactly. And the data backs that up. The latest CPI report from May shows airfare down about 12 percent year-over-year. Meanwhile, average hourly earnings for private workers hit thirty-seven dollars and sixty cents in June — up about 2.9 percent from a year ago. So your paycheck is climbing, and one of the big discretionary expenses is actually declining. Luna: That's a pretty rare combination. Most of the episodes we've done this season have been about things like rent or insurance — where wages are just barely keeping pace. Here we've got an actual price drop. Lucas: Right. And the question is why. Part of it is capacity. Airlines added a ton of seats coming out of the pandemic — especially on domestic routes. The big carriers like American, Delta, and United all expanded their fleets, and then you've got the ultra-low-cost carriers like Spirit and Frontier competing aggressively on price. Luna: So it's a supply story more than a demand story? Because travel demand is still strong — airports are packed. Lucas: Demand is strong, but supply grew even faster. According to the Bureau of Transportation Statistics, domestic capacity in the first half of 2026 is up about 8 percent from the same period in 2025. That puts downward pressure on fares. Plus, fuel costs have been relatively stable — jet fuel prices are roughly flat year-over-year after spiking in 2022 and 2023. Luna: So airlines aren't forced to raise ticket prices just to cover fuel. That helps. Lucas: It does. And there's another factor: the way airlines price tickets has gotten more granular. With dynamic pricing algorithms, they can fill seats at lower margins on off-peak days and make it up on premium cabins and add-on fees. So the base fare you see — like my one-seventy-nine roundtrip — might be subsidized by baggage fees or seat selection charges. Luna: Which means the 'headline' airfare in the CPI might understate what people actually pay once you add the extras. But if you travel light and book early, you really can save. Lucas: That's the key. And it's worth noting that this is a reversal from the pattern we saw in 2021 through 2023, when airfare inflation was running at double digits some months. The CPI for air travel actually peaked in May 2022 and has been trending down since. Luna: So for listeners who've been feeling squeezed by rent and groceries — which are still up — at least there's one big category where the purchasing power of their raise has clearly improved. A roundtrip domestic flight now costs about 1.5 percent of median weekly earnings, versus maybe 2 percent a few years ago. Lucas: That's a great way to frame it. And you know, speaking of things being worth it — if this kind of analysis has helped you think about your own money differently, honestly, if today's episode was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. Luna: Yeah, listener support is what keeps the show ad-free and lets us dig into these numbers every week. No pressure, but if it's added value, it's appreciated. Lucas: Alright, back to airfare. One risk on the horizon: if fuel prices spike again — say, due to geopolitical tensions — airlines might have to raise fares. But for now, the trend is your friend. Luna: And the other risk is that airlines eventually cut capacity. If they overcorrect and reduce flights, prices could come back up. But the summer schedule looks full, so probably not this year. Lucas: Agreed. I think the takeaway for listeners is: if you've been delaying a trip because you assume flights are expensive, check the actual numbers. Your raise might cover more of that ticket than you think. Luna: And if you're an investor, keep an eye on airline earnings calls next week. The capacity and pricing commentary will tell us whether this is a sustainable trend or just a summer special. Lucas: Great point. For Wages and Prices, I'm Lucas. Luna: And I'm Luna. See you next time.