When bookings slow, the temptation for airlines is often to make lower fares available. But is price really the problem?
War, rising fuel prices and inflation are putting airlines and passengers under pressure at the same time. Airspace disruptions are changing schedules and travel options, while household budgets influence where people travel and what they are willing to spend. For airline commercial teams, the challenge is recovering higher costs without losing valuable demand.
The impact differs by region. Across March–May 2026, Middle Eastern carriers recorded year-on-year traffic declines exceeding 28% each month, amid severe operational disruption. European carriers maintained growth throughout the same period, while North American carriers moved from growth in March to modest declines in April and May.
Meanwhile, IATA’s June outlook forecasts fuel at approximately 31% of airline operating expenses in 2026, compared with 25% in 2025. Passenger ticket yields are forecast to rise by 7%, but total revenue growth is expected to fall behind operating expense growth.
In this environment, slower bookings can quickly create pressure to lower prices. However, my experience has taught me that understanding what’s behind the slowdown is just as important as deciding how to respond.
Understand where the demand has gone
A booking shortfall tells us that a flight is developing differently from expectations. It doesn’t, by itself, tell us why.
Passengers may be delaying their purchases, choosing another connection or responding to additional capacity. Demand may also have genuinely weakened. Each scenario has different implications for whether an airline should make lower fares available.
The regional differences illustrate this distinction. Some traffic has been lost through disruption, while some has shifted to other services. The same event can create a shortfall for one airline and an opportunity for another.
Sometimes timing matters more than price
During high season, I have seen competitors add extra flights and temporarily draw bookings away from existing services. The immediate response can be to make cheaper fares available to regain momentum.
However, when demand remains strong relative to the seats available, those bookings may simply arrive later. As competing flights fill, the options available to passengers change.
Holding availability at higher yields can therefore be a sound commercial decision. Ultimately, the decision comes down to how much demand is still expected, what competing airlines are offering and how much time remains before departure.
Regularly reviewing these factors helps commercial teams decide whether to maintain their position or adjust availability as the market develops.
More bookings must earn their place
Lower prices can generate additional bookings but still produce less ticket revenue. The extra passengers must compensate for the lower yield, including on passengers who would otherwise have booked at a higher price.
That’s why I believe any pricing adjustment needs a clear purpose. Are we likely to attract genuinely additional demand, and will the resulting revenue justify the decision?
Afterwards, booking pace, yield and expected revenue should be reviewed together. A flight filling faster may be encouraging, but the real question is whether its overall revenue outlook has improved.
Give teams the flexibility to respond
Aviator, Maxamation’s revenue management system, supports these decisions through automated optimisation, flexible forecasting and business rules. Its easy-to-use interface helps analysts review performance and apply their market knowledge within the airline’s broader commercial priorities.
When demand becomes uncertain, the right response starts with understanding what has changed. Sometimes that means adjusting fare availability; other times, it means allowing more time for demand to develop.
Effective revenue management isn’t simply about filling seats. It’s about understanding when to respond to changing demand and when holding firm may deliver a better commercial outcome.
Contact Maxamation to learn more about Aviator or arrange a demo.
References
IATA (29 April 2026). March Passenger Demand Up 2.1% But Sharp Regional Differences.
IATA (28 May 2026). Middle East War Leads to 3.4% Fall in Air Passenger Demand in April.
IATA (30 June 2026). Air Passenger Demand Falls 2.2% in May.
