Airline fares rose 23% in August but demand has not slowed down

One of the fastest-rising prices last month was airline fares. They were up 23% year over year in August, according to the latest consumer price index report. And they’ve been climbing steadily all year.

Jet fuel prices pushed higher by war in the Middle East are just part of the reason why.

After a short reprieve, the price of jet fuel has been rising since July. And a few weeks ago, Scott Kirby, the CEO of United Airlines, told CNBC he expects fuel prices to stay elevated into next year.

“The good news is, I think that we're going to be able to pass all of that on in 2027,” he said — as in, pass it on to customers because they can.

Demand for plane tickets has not slowed down, even with rising fares. It’s especially strong for premium seats: first class or economy-plus, according to Meghna Maharishi, an airline reporter with the travel industry publication Skift.

“Premium has been really resilient,” she said. “So it doesn't really seem like higher airfares have really made an impact on that sort of spending.”

Airlines are expanding their premium seating and taking seats out of the main cabin, according to Henry Harteveldt, head of Atmosphere Research Group.

“And if there are fewer regular coach seats available, it's a ‘Hunger Games’ situation. You've got more people clamoring for those seats. It gives airlines less incentive to discount those seats any more than they feel is necessary,” he said.

Also pushing up prices of economy tickets, Harteveldt added: the demise of Spirit Airlines, which offered discount fares.

“Absent Spirit, there’s less price competition,” he said. And that gives other airlines more power to raise fares.