Why airline ticket prices are so high (chart)

Why airline ticket prices are so high (chart)

its worst pandemic past and international borders are now open. THE Airlines companies they can continue their smooth operation while hoping for increased profitability due to its increase tourism and business trips. However, ticket prices have now increased significantly.

One of the reasons is the lack of planes. Airlines have been forced “put on ice” large number of aircraft due to reduced demand during the pandemic. Now more they have difficulty to bring them back to their fleet, because the bigger planes are needed 100 hours of service before restarting.

The second reason is that consumers seem ready to pay handsomely for these tickets, having remained “trapped” at home for one or three years. According to recent research by Booking.com with a sample 25,000 respondents planning a trip within the next two years, consumers seem more relaxed in terms of ticket prices after three years pandemic crisis.

“Even though many trips are much more expensive than they were before the pandemic, many consumers feel the trips are worth the increased cost,” the Booking.com executive said. Marcos Guerrero.

The bad news for consumers is that these high prices will continue for several years. At least that’s what he claims its CEO Ryanair Holdings Plc., Michael O’Leary.

Lack of workers

Registered airlines losses of 200 billion dollars due to the pandemic, while the sector has been affected by layoffs tens of millions of workers, reports the Bloomberg. Given the recovery in the industry at the moment, airlines are desperately trying to increase their workforce. Many former employees, meanwhile, have decided to change careers.

Shortages have increased the delays in check-in, baggage handling and passport checks. They have also forced airlines to increase the wages they offer their workers, which in turn increases the cost of tickets.

expensive oil

Its prices oil have been streamlined, but the crude price is still there 50% morefrom the corresponding one of January 2019, which poses a problem for the operating costs of airlines. Many of them, in particular companies offering cheaper tickets, have no protection against variations in the price of “black gold” and are vulnerable to crises such as the one created by war in ukraine.

Airlines account for just over 2% of global air emissions, but have done little to reduce these gases. One of the main reasons is the fact that environmentally friendly aviation fuels cost up to five times more than their traditional counterparts.

Industry should invest 2 trillion dollars to achieve net zero by 2050, according to IATAresulting in higher ticket prices to cover increased costs.

At the same time, some of the newest technologies such as the use of hydrogen and electric planes remain at the research stage and will be extremely expensive even if they are built.

Aircraft shortages

Until 16,000 aircraft of the world’s merchant fleet shut down its engines during the pandemic. Their return to service is something extremely difficult since each part of the aircraft will have to be checked in order to confirm its safety. Many of these aircraft remain in the deserts of Australia and the United States to minimize rusting, but many have new interior or engine damage.

In addition, aircraft manufacturers are delaying new deliveries given the labor shortage. THE punishments against Russia have also restricted access to titanium and other raw materials, driving up component costs.

The supply of new engines is an additional problem. Companies such as Spirit Airlines Inc. and the Indian IndiGo they have been forced to reduce their flights because there is a shortage of parts and manufacturers cannot produce new engines. Some new generation engines also require increasingly frequent maintenance.

“In the medium term, the weakness of Airbus And Boeing in terms of increasing their deliveries means that capacity will be reduced in the coming years,” O’Leary said at a recent conference. Bloombergestimating that ticket prices will increase by double digits this summer.

The China Factor

The world’s second largest economy and source $280 billion in tourism spending per year before the pandemic continues to recover from the coronavirus lockdowns. Given the delayed “opening” of the economy, Chinese travelers have not resumed international flights, while 30% of them, according to a recent survey, do not plan to travel outside of China in 2023.

THE Association of Asia-Pacific Airlines pointed out that the Chinese market’s return to pre-pandemic normalcy will take at least a year. Domestic passenger traffic has seen a significant recovery close to 2019 levels, but the return of Chinese on international flights will be further delayed.

This delay translates into airlines not wanting to fully recommission their fleets, limiting supply and increasing fares.

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