Airfares surge 27% from a year ago, here's what to expect this summer amid high demand

Yahoo Finance columnist Vera Gibbons breaks down the rise in travel demand and details how it will effect summer airline prices.

Video transcript

DAVE BRIGGS: Airlines are expecting a busy travel season this summer and passengers are hoping to have an easy experience boarding their flights. Lucky for them, the Federal Aviation Administration announced a new plan to mitigate flight disruptions at some of the country's busiest and biggest airports. Let's bring in Yahoo Finance contributor Vera Gibbons to discuss this. Vera, nice to see you. So how does this play out?

VERA GIBBONS: Yeah. How does it play out? That's a big question mark going forward. I mean, they are taking these steps now, because we are anticipating one of the busiest summer travel seasons on record, particularly for domestic travel. And people have been complaining about congestion, delays, changes to their itineraries last minute, poor reservation agents, poor booking system, all sorts of problems. So they're trying to get ahead of the problem by bringing in DC to try to limit the disruptions.

But there are so many other issues plaguing the industry that I just don't know if it's going to be a smooth summer travel season. I mean, the problem is that passenger volume is back up to 2019 levels. It's exceeded it on a couple of months. And the airlines are just ill-prepared to handle the volume. So they're really trying to play catch-up. And they're dealing with all sorts of staffing issues still, training issues still. Manufacturers can't get enough aircrafts built to keep up with the demand.

I think that the recovery in air travel just happened a lot faster than anyone could have possibly predicted. And the airlines are paying the price. And so are we, actually, because the prices are so crazy. I don't know if you've flown lately. But I mean, I fly regularly from Palm Beach to Providence back and forth. And sometimes, it's like $614. So I sit around and wait for the fare to actually drop. But the airfares are ridiculous. And the airlines can get away with it, because the demand is through the roof.

DAVE BRIGGS: Yeah. And what could go wrong? Bringing the federal government, it's bound to get better. To your point, airfare is surging 27% from a year ago. Average ticket prices to popular destinations like Orlando and Vegas up even more. This is setting the stage for what is expected to be a very busy and expensive summer season indeed. Why is there so much demand?

VERA GIBBONS: Yes. This does set the stage for what is expected to be a very busy and expensive summer travel season. Like I said, probably one of the busiest domestically. We're also seeing more people interested in going to Europe. People are planning. They plan their trips very early on in the season. They want to get out. They want to get away.

Part of the pent-up demand just has to do with the fact that we've been cooped up for so long. And people really want to get back out there and live a little after, you know, these rough couple of years that we've all had. The other part of it is people are combining business trips with leisure trips. This is this whole "bleisure" trend that's actually going on.

Also, people see travel now as like really important to one's mental health. And I think that that's important. It's very good to unplug and get away from your daily stresses. That's taking precedence. And that's increasing more interest in people actually getting away.

And then also, keep in mind, too, that everybody's working from home. They're working remotely. They can work from anywhere. So they are traveling, you know, during the week, not just the weekends anymore. In fact, I spoke to one travel agent. And he said, traveling these days is like traveling on the Wednesday before Thanksgiving every day now, because it's just a constant flow that the airlines have been ill-prepared for.

DAVE BRIGGS: Yeah. It is nuts out there. So circling back to where we started here with the FAA, what can they actually do? How can they actually impact this process? And what is the status of this plan?

VERA GIBBONS: I'm actually not-- I'm not feeling optimistic that they are going to make a meaningful impact on the process, because I feel like the airlines are just so far behind in where they should be in dealing with these issues. I mean, one of the primary ones that we've been dealing with is the staffing issues. They can't get the pilots. They can't get the agents. The training has been sort of lackluster. In my professional opinion, I mean, I've had problems with reservation agents. I've had problems with booking. I've had problems with my apps.

So I think that the problems are too significant for Washington to actually tackle. They're trying to get ahead of the problem. But given the fact that the volume is expected to be blockbuster for the summer travel season, I just don't actually foresee any kind of solutions going forward, nor do I actually foresee a lot of deals this summer travel season. Those are going to be really hard to actually come by.

So the airlines are faced with a number of issues. Then they're trying to tackle them. They've been trying for some time now. And I don't think that bringing in Washington is going to alleviate the stresses that come with traveling these days. I mean, it's just a big headache. But people are more than willing to actually accept the headache, because they want to get away at any cost. And even if it does mean flight delays or last-minute itineraries that have been canceled or changing of the seats or anything, I mean, people are just really want to get out there.

DAVE BRIGGS: Yeah. We just keep traveling. Underlying all this, though, the FAA has been for years underfunded. And that's probably not going to change anytime soon. Vera Gibbons, nice to see you. Thanks so much.