In France alone, the average airfare in April was 32.6% higher than the same period four years earlier, while airfare to the Asia -Pacific region increased by 51%.
Aviation experts predict that although oil prices have decreased, airfares may remain high in the near future.
Airfares have already risen as demand for air travel gradually recovers from 2022 as countries lift restrictions related to the COVID-19 pandemic.
This year, however, just as airlines expected passenger numbers to recover to pre-pandemic levels, airfares have really spiked.
In France, figures from the country’s civil aviation authority show that the average airfare in April was 32.6% higher than the same period four years earlier, with airfares to the Asia- Pacific region alone up 51%.
In the US, an index released by the Federal Reserve Bank of St Louis shows that airfares increased by 11% between April 2019 and April 2023. Fares have risen despite oil prices falling from their peak in early 2022 when the conflict in Ukraine broke out.
The International Air Transport Association (IATA) estimates fuel prices will fall to an average of $98.50 a barrel this year, down from $135.60 a barrel last year.
Accounting for about 25%-30% of airlines’ costs, fuel is often a significant factor in ticket prices. But factors such as labor costs and other supply chain costs are still rising, according to IATA chief economist Marie Owens Thomsen.
Airlines will have to find ways to offset these costs if they don't want to return to losses just as they recover and are still struggling to pay off huge debts accumulated from the COVID-19 pandemic.
According to Mr. Vik Krishnan, an aviation expert at the strategic consulting firm McKinsey, the main problem now is not the price of oil but the fact that demand is too high while transportation capacity cannot meet it in time.
Aircraft manufacturers' order books were full by the end of the decade, but even now, they are struggling to meet delivery targets due to lack of parts or materials.
In addition, labor wages are also a thorny issue. Expert Geoffrey Weston of consulting firm Bain & Company said that many airlines have had to adjust contracts with employees, from flight crew, in-flight service staff to the entire supply chain including ground control staff, maintenance teams... and all have to pay significantly higher salaries than before the COVID-19 pandemic.
There are few factors that can help reduce airfares in the current climate. And with airlines investing hundreds, if not trillions, of dollars in new planes and renewable fuels to meet their 2050 decarbonization goals, IATA economist Owens Thomsen says airfares are unlikely to fall anytime soon.
Costs will rise until all of these solutions become commercially viable and create a balance. She predicts that “sweet spot” will only occur around 2040./.
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