Jefferies, using Bureau of Labor Statistics consumer price index figures, highlights a sharp acceleration in airfares in May, which rose 26.7% on a year-over-year basis. That pace stepped up from a 20.7% increase in April and a 14.9% gain in March. On a seasonally adjusted basis, airfares climbed 2.7% from April to May.
Broader inflation measures showed the overall CPI up 4.2% year-over-year in May, matching consensus expectations, and rising 0.5% month-over-month, also in line with forecasts. Core CPI, which excludes food and energy components, increased 2.9% year-over-year and is reported as 0.2 percentage points higher than in March.
Jefferies notes that the pronounced year-over-year acceleration in airfares is partly driven by easier comparisons across the February-through-June period; airline bookings were affected by geopolitical concerns in spring 2025, lowering the base from which this year’s gains are measured.
Metrics from the largest U.S. carriers indicate modest expansion in yields. For the four major U.S. airlines, average passenger yields rose 1% year-over-year in 2025 and remain 16% above 2019 levels. Domestic yields also increased 1% year-over-year and are 15% higher than in 2019, while international yields held flat year-over-year and sit 23% above 2019 benchmarks.
Traffic trends are less supportive. The International Air Transport Association reported that air traffic fell 3.4% year-over-year in April 2026, following a 2.1% year-over-year increase in March, signaling softer passenger volumes in the most recent month reported.
From a household expenditure perspective, U.S. airline revenues are running at approximately 1.7% of disposable income, down from a historical average of 2.0% or more. Shifts in consumer confidence add context: The Conference Board’s Consumer Confidence Index edged down 0.6 points in May to 93.1 from 93.8 in April. The Expectations Index rose 1.0 point to 74.4, but it remains below the 80 threshold for the 15th straight month.
Market-linked vehicles tied to the airline sector show varied relationships with inflation and rates. The JETS exchange-traded fund exhibited a relatively weak negative correlation with core CPI over the past decade. However, isolating the last 12 months increases that correlation to 0.75, a notable shift from a -0.31 correlation in 2024. Post-COVID, the fund was largely uncorrelated with interest rates after earlier periods of co-movement, although a negative correlation has emerged during the current cutting cycle.
The combination of sharply higher airfares, mixed traffic data and evolving correlations between airline-related ETFs and macro variables highlights uneven dynamics across demand, pricing and market behavior.