Don't get your hopes up that the global "recession" is going to make flight prices go down

I have heard it among a lot of people that managed to not be a part of the investment world in a way where this apparent global downfall of stocks, crypto, or whatever, doesn't really affect them. These people either were involved in it previously or have set themselves up to be insulated from market fluctuations, which I think is wise but you know... hindsight and all that.

I have been traveling for a long period of time, relatively speaking, and I have seen people getting hopeful that a stock downfall is for some reason going to make things like flights, accommodation, or just travel in general go down in price. While it might happen for things like accommodation because they are severely driven by supply/demand, I honestly don't think that this will be the case with flights given what I have experienced over the years.

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I base a lot of my information on the first time I started traveling compared to prices now as well as what the prices were during Covid or even shortly after it. Let's start with the first thing.

I first started traveling long-term which lead to me doing it almost permanently around the turn of the millennium. During these years everyone seemed to be doing reasonably well financially and the dot-com crash was behind us. Things were actually expanding during as far as flights were concerned as low-cost airline options were becoming very widespread, perhaps even starting to overtake traditional airlines as far as popularity is concerned. My first flight over the pacific ocean was just over $800 round-trip. Now while that might sound impossible I want people to know here we are more than 2 decades later and the prices are actually LOWER now when you compare it to inflation. This could have to do with a lot of factors such as increased competition or other economic factors but I don't pretend to understand all of that and don't aspire to because having that knowledge wouldn't benefit me in any way.

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From that first international flight that I ever took, I have actually been a bit alarmed at how affordable the price of international flights are compared to domestic flights. This is true for Americans and perhaps a few other nationalities whose countries are relatively huge. I can only speak from my own perspective but I do recall wondering many times in my life why a 3 hour flight each was, when getting a round trip ticket would be $400 while a flight that takes over 20 hours would cost just over twice that much. It MUST be supply and demand because I can't figure anything else that it could possibly be. Perhaps price-gouging of Americans.

Then let's fast forward to Covid times when many airlines were completely grounded due to people not moving around very much. One would think that the diminished demand would adjust the market in a price-gouging sort of way, but that isn't what really happened. What we did see was that flights went up slightly, but not dramatically, even though most of the world's airlines were not even operating. The big increase in ticket-prices actually happened after the crisis was over and this is something that I feel can point to corporations taking advantage of consumers because well, they can do that unless you have your own plane. One would think that since there was such a massive increase in demand once the world "opened back up" that airlines would compete with one another on price points but that isn't what happened: Instead the airlines INCREAESED their prices in what seemed to be a backroom agreement sort of thing. This remained that way for about 8 months or so after the world was open again. Then I guess some carriers wanted a bigger piece of the pie and started offering deals in violation of their back-room agreement.

Now with the world suffering some sort of economic downturn it is logical to assume that fewer people will be traveling and in order to entice people to do it anyway, the airlines would offer incentives for people to fly but it has been my experience that the airlines simply do not operate that way. Instead of offering lower prices they will simply cut the number of flights.

Supply and demand work exactly that way. The airlines have a certain amount of money that they want to make per customer and once the try to play with the numbers to get more customers they actually do so to their own detriment. Believe it or not, it costs a massive amount of money to operate a plane and they will have mathematicians and actuaries that can determine that "sweet spot" of optimizing profits and as strange as it sounds, airlines would rather have fewer customers paying higher prices, than loads of customers that are paying lower prices. This is why some airlines appear to prefer to have an empty business class rather than reduce the cost even when economy is sold out.

I'm trying to turn this into a business class lecture but that is likely the wrong approach. All I know is that I have been through multiple global situations where one might assume that in order to keep the industry functioning that the correct move would be to lower prices per person but it has been my experience that this isn't going to happen. I believe that the prices that are being charged right now will be the prices that are being charged a few months from now even if this bloodbath in the markets continue.

So if you are hanging on hoping for some sort of dramatic price cut in flights just know that in my experience this has never been the case and I would be genuinely stunned if it were to happen this time around. I believe that flights, especially non-business-oriented flights overseas, are already as cheap as they are going to get.