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Air tickets prices expected to keep increasing, fueled by inflation

Air tickets prices expected to keep increasing, fueled by inflation

After falling significantly during the pandemic, air ticket prices have reportedly started to rise again. According to experts the trend is expected to keep on going driven by environmental pressures.

This week in Doha, the International Air Transport Association is holding its annual meeting, where the members are focused on the risk of such an increase undermining the overall passenger growth target as the industry tries to recover from a multi-year economic slump. 

Meanwhile, the IATA has called on governments to reconcile long-term carbon-free commitments with the ambitious targets it has set.

As per reports, for two years, the aviation industry has had to go through a phase where planes traveled mostly empty, even as they tried to build back consumer confidence by offering fares that were lower than the pre COVID-19 pandemic rates.

However, the era of low fares seems to have come to an end as the sector keeps dealing with issues o multiple fronts despite restrictions on global movements being mostly lifted.

In April, the pre-tax price of a return ticket in the European Union reached the same level it was for April of 2019, after having fallen 20 percent in 2020. The impact on oil prices due to Russia’s invasion of Ukraine is the most obvious cause of these price increases.

As per reliable estimates, fuel costs will represent 24 percent of airlines’ total expenses this year, which is up by five percentage points from last year. Ticket prices are also being pushed up by wider inflation, which is at a 40-year high across developed markets, and an higher-than-expected demand for tickets as well as labor shortages.

Vik Krishnan, a McKinsey & Co. partner cautioned that the current high demand is largely a result of all the stimuli that governments provided, boosting citizens’ spare income during the pandemic.

Krishnan further added that traveling is the number one option for income spending and people are doing it right away, but the point is how long they can do so.

The International Airport Transport Association urged governments to provide subsidies to boost SAF production to 30 billion liters in 2030. However, Willie Walsh, IATA director general, stated that the transition to net zero must be reflected in ticket prices even if subsidies are forthcoming.

Meanwhile, Krishnan believes that it will make democratization difficult as low-cost airlines have created a world where people living in North Europe can afford to vacation in Southern Europe on a budget. Such expectations will become very difficult for the governments to deal with.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.