Airline fares for domestic U.S. flights are rising twice as fast as international trips — here’s why

As The New York Times reports, many of the hottest domestic routes this summer surged by 35%, while international flights went up only 15% in comparison to last year. In fact, the last time summer domestic flights were this elevated was at the height of post-lockdown “revenge travel” period in 2022.

International flights may burn far more fuel, but they also carry more passengers on larger aircraft and airlines can spread those costs across hundreds of seats. Airlines also don’t set fares just based on fuel costs; they price tickets based on what people are willing to pay.

For example, despite seven fare increases this year starting in February, Southwest Airlines CEO Bob Jordan told The New York Times there’s still “no drop-off in demand” from travelers. Plus, the doomsday fears of fuel shortages some analysts expressed at the beginning of the Iran War haven’t materialized.

“I think the outcome was not as bad as many predicted,” Christopher Anderson, professor of services management at Cornell University, told Fortune.

The combination of high demand and lower relative capacity in the domestic market helps explain the “elevated prices” in Anderson’s view. The International Air Transport Association (IATA) reported that total demand increased 3.8% between January 2025 and 2026, while capacity for international flights rose nearly 6% versus a drop of 0.4% for domestic flights in the same timeframe.

Pricing power in “premiumization”

Keep in mind, airlines aren’t just making money by selling seats. Increasingly, they rake in revenue from features revolving around those seats (think priority boarding and checked bags).

One of the most profitable strategies in recent years has been to make the flying experience extra plush. Melius Research analyst Conor Cunningham told The New York Times that his firm has seen prices for premium seats climb faster than those for economy class as customers show a willingness to pay up.

In response, airlines are continuing their “premiumization push” by catering to high-class clientele. For instance, Travel Weekly reported that American Airlines increased its premium economy, business, and first-class seating by 16% versus 5% for economy seats between 2019 and 2025. United went even further with a 40% jump in business and premium economy seats over the same period.

With one less threat of the ultra-budget airline Spirit Airlines now out of the picture, it seems domestic carriers are even less inclined to reduce their prices to court economy passengers.

How the K-shaped economy impacts airfare

Analysts like Anderson suggest that the increase in fares is more a signal of growing wealth inequality than just an airline-centric strategy.