Airfares Soar as Airlines Trim Flights Amid Demand Rebound

As of mid-August 2025, the airline industry is seeing a resurgence in airfares after an extended downtrend. According to the latest consumer price index report, airfares jumped 4% in July 2025 from the previous month, marking the first monthly increase since January.

For much of the peak travel season earlier this year, consumers had been enjoying lower prices, with airfares ticking down 0.1% in June and falling 2.7% in May. However, that trend appears to have reversed, as airlines are now trimming flights more aggressively than usual heading into the late summer.

Domestic capacity among U.S. airlines has dropped 6% in August 2025 compared to July, a larger cut than the 4% seen during the same period a year ago and the 0.6% cut in 2023. This capacity reduction is also more significant than the 1.7% drop between July and August in the pre-COVID summer of 2019.

The shift in the industry's approach comes as demand for flights is rebounding after earlier uncertainty. Earlier this summer, airlines had found themselves with too much capacity as their expectations for another travel boom clashed with the impact of President Trump's trade war in the spring. However, with some of that uncertainty now easing, airlines have reported that demand is strengthening, with security screenings at airports in July and August 2025 up from a year prior.

"The world is less uncertain today than it was during the first six months of 2025 and that gives us confidence about a strong finish to the year," United Airlines CEO Scott Kirby said last month.