Recent analysis has shown that airfares cost more, with average ticket prices rising more than twice the inflation rate in February globally on average. With this, carriers seem to be cashing in on increased demand in the post-pandemic travel boom. With the cost of living on many people's minds, travel may be one of the last things people consider. However, for those looking to jet off for work or pleasure, it becomes evident that everything will cost a little more than usual.
On over 600 of the world's most popular routes, inflation in ticket prices was sitting at an astonishing 27.4% for February, which marked the fifteenth consecutive month of double-digit growth. As reported by the Australian Financial Review, the data was analyzed on popular routes flown globally, using one fare economy class fares, excluding any extra taxes and fees.
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Travel costs more.
Pre-pandemic price wars were evident for many popular routes; however, as airlines look to recoup losses, combined with the increased cost of operations, there has been a significant change in ticket prices today. As noted by the Australian Financial Review, on average, a one-way economy class ticket from London Heathrow (LHR) to New York John F. Kennedy Airport was $343, which sat at an increase of 23% compared to a similar ticket in 2019.
Increased airfares are hitting Miami to Bridgetown, where the airfares have hit 126% for February, and tickets between LAX and Mexico City are doubling. This is the most significant change in airfares since recorded in 2014.
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Operational costs are being passed onto travelers.
With airlines looking to rebuild post-pandemic, airlines are looking to pass elevated costs onto consumers. Many airlines that retired fleet and furloughed staff throughout the pandemic are just getting back on their feet and looking to rebuild their schedules as demand increases. Airlines were one of the worst-hit sectors throughout the pandemic and lost a combined $200 billion over the subdued aviation period.
Major carriers such as American Airlines, British Airways, Lufthansa, and Air France are predicting strong demand and improved revenues over the Northern Hemisphere summer and looking to capitalize on the increased demand to help return the carriers to the black. However, as travelers grizzled at the price of airfares, Luis Gallego, the Cheif Executive at IAG, had this to say:
“It is in our interest to offer competitive pricing. But airlines must pass on rising costs in the “high inflation” environment.''
Industry experts weigh in.
The hopeful outlook for this year was that airfare prices would decrease as airlines stabilized their operational shortfalls and recovered from the pandemic, especially since the demand wasn't dying down anytime soon. But according to AirAsia (now Capital A) Chief Executive Officer Tony Fernandes, such hopes will likely be dashed for passengers.
The disruption to the global supply chain has impacted aircraft manufacturers' ability to speed up production rates. At the same time, airlines suffer from maintenance issues as spares are harder to come by. Without new aircraft readily available and current aircraft experiencing technical problems, airlines have to outsource third-party agreements for wet leasing and maintenance, which incur higher expenses.
Even with a rather blissful year of recovery for most airlines in 2022, the global airline industry is still not in the most favorable position to offer lower airfare allowances for passengers. The lack of required capacity within the sector to absorb higher expenses will undoubtedly mean that passengers can only look forward to continuing higher airfare prices. As they say, it's never a dull day in aviation.
Sources: Australian Financial Review