Why Flights Are Getting Pricier Since Early 2022
The aviation industry has experienced a surge in airfares since early 2022, with prices reaching 20-30% higher in summer 2023 compared to 2019, according to the EU. This increase, despite widespread inflation, has raised concerns among travelers and prompted EU Commissioner for Transport Adina Valean to investigate.
The surge in airfares is attributed to two main factors: increased demand and disrupted supply chains. The COVID-19 pandemic led to significant losses in the aviation industry, estimated at least $200 billion by the International Air Transport Association (IATA). However, as the world returns to normalcy, a travel boom has ensued, with major airlines such as Ryanair, Lufthansa, Singapore Airlines, and others reporting record profits in 2023.
Airlines argue that the high demand, coupled with their limited capacity due to supply chain issues, has forced them to raise prices. Delays in aircraft production by Airbus and Boeing, along with increased costs related to staffing problems at airports, contribute to these challenges. Some critics, including Karolina Wojtal from the EU’s European Consumer Centres Network, accuse airlines of allowing prices to rise higher than the rate of inflation through automated booking systems.
Supply chain issues, coupled with sustained high demand, suggest that airfares may not decrease in the near future. Additionally, the aviation industry faces potential cost increases as it transitions to sustainable aviation fuels, contributing to a long-term projection of rising fares. Willie Walsh, the director-general of IATA, anticipates higher fares over the next 15 years due to the increased costs associated with sustainable aviation fuels.
Environmental groups argue that higher airfares could help reduce air traffic growth, fund green initiatives, and lower emissions. Suggestions include increased taxes on kerosene fuel, a frequent flyer tax, higher landing charges, and reduced government support for the aviation sector. Some governments, such as Italy, have considered capping airfares to address the issue, while France is exploring the possibility of setting minimum prices on flights within the EU to curb emissions.
While EU Commissioner Valean has expressed no immediate plans to intervene in the aviation market, governments and industry stakeholders are grappling with the complex challenge of balancing economic considerations with environmental and social concerns in the evolving landscape of air travel.
