Factors Driving Airline Ticket Prices Higher Amid Industry Recovery
As airlines resume operations following the global disruptions caused by the coronavirus pandemic, industry leaders have highlighted a range of factors that could contribute to further increases in airfare. According to the International Air Transport Association (IATA), flight prices are expected to be higher in the current period.
Rising Costs for Passengers
Experts caution that the cost of air travel for every passenger is likely to experience an uptick. A primary driver of this trend is the soaring price of aviation fuel, which constitutes a third of airlines’ operational costs. Additionally, the industry’s commitment to decarbonization and competition for limited resources of sustainable aviation fuel (SAF) are expected to exert further pressure on fares.
Industry Response
IATA Director General Willie Walsh stated that airlines will continue to take measures to manage costs in the interest of consumers. IATA forecasts that airline profitability will soar to record heights in the near future, potentially reaching around 1 trillion euros. This year, the volume of air passengers is anticipated to hit 4.96 billion, with total spending by carriers projected at 936 billion dollars (approximately 862 billion euros)—yet another record. However, the industry’s profit for this year is estimated to be close to 60 billion dollars (around 55 billion euros).
As the aviation sector grapples with increasing costs and changing market dynamics, passengers may need to brace for higher ticket prices in the coming months as airlines navigate through this complex landscape.
