Airline ticket prices are rising while inflation is undermining purchasing power, but airlines in Europe confirm summer bookings are full, hoping to turn the page on their crisis after passing the peak of the Covid virus outbreak.
Some companies have not fully resumed their operational capacity, which was reduced during the health crisis, while Airbus and Boeing are facing difficulties in delivering new aircraft on time, but customers are accepting airline tickets in greater numbers than they were in 2022.
In these circumstances, the repercussions of the law of supply and demand are evident. In France, for example, ticket prices increased by 23.6% on an annual basis in the first quarter of 2023, according to the statistics of the Ministry of Environmental Transformation.
One of the most important reasons for the increase in ticket prices is the increase in the price of fuel since the start of the Russian invasion of Ukraine, as jet fuel represents about 30% of airline costs.
“Because of the 71% year-on-year increase in oil prices, our average tariff has increased by 31%,” EasyJet CEO Johan Lundgren told AFP.
However, there are other factors such as the “very sharp increase in maintenance costs” associated with the scarcity of some minerals and the disruption of supply chains, according to Marc Rocher, the head of the French companies “Air Caraib” and “Français Bay”.
Rocher also notes the implications of airline employee pay increases for ticket prices.
However, Lundgren stresses that “we don’t see a weakness in demand”, although customers “are looking for the best value for their money”.
‘More priority for travel’
Nicolas Henin, assistant general manager of Transavia France in charge of sales and marketing, shares this sentiment, and says he hears “a lot of feedback” from customers who have noted the relatively high cost of tickets.
But Henein points out that “at the moment, we haven’t seen any impact on demand,” although “it’s something we’re watching closely.”
“Since the pandemic, people have given more priority to travel,” Lundgren said.
Transavia’s summer flights to Greece, one of its main destinations, reported 60% fullness by mid-April.
The company also opened new destinations (Dakar, Yerevan, Paphos, etc.) and increased its fleet to 71 aircraft. The low-cost airline of the “Air France-KLM” group has seen its capacity increase by 65% over four years.
Maghreb cities are among the other destinations that are witnessing a “very significant recovery,” because “people have not been able to visit them to see their families for a while,” according to Hanin. Algeria has only recently lifted restrictions on flights.
Having tended to book very late during the pandemic amid uncertainty about border closures, “more selective” customers are also gradually returning to their old behaviour, such as booking tickets five months in advance for distant destinations, says Rocher.
There is a lot of good news for the aviation sector, which is in “a very good situation, in a state of complete recovery” after the Covid nightmare, according to Alex Partners expert Pascal Fabre.
During a recent meeting with the press, the specialist pointed out that the price hike “brought many companies a higher sales volume in 2022 than they were before the crisis,” and transport companies “achieved returns and started to reduce indebtedness.”
This is the case of the “Air France-KLM” company, which announced earlier this week that it had “paid in full” the assistance it received from the French state to enable it to overcome the health crisis.
However, there are those who warn against excessive optimism, as actors in the sector warn of a recurrence of staff shortages during the peak season, similar to last summer, which could cause chaos, which they also experienced in March during the strike of air traffic controllers in France.
2023-04-23 10:01:38
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