Airfares are rising at more than twice the rate of inflation as airlines profit. Rapid increase in travel demand It has bucked broader economic headwinds.
Average ticket prices on more than 600 of the world’s most popular routes rose 27.4% annually in February, the latest month for which data is available, marking the 15th straight month of double-digit growth, according to the Financial Times. was recorded. Data analysis of the airline Cirium.
In contrast, US inflation, a measure of global inflation in advanced economies, has grown by less than half over the same period.
This data analyzes the prices of popular routes around the world and uses average economy class one-way fares excluding taxes and fees.
Many routes have seen significant price increases this year compared to pre-pandemic levels.
The average one-way fare for an economy class transatlantic flight from London Heathrow to JFK, New York this February was $343, 23% higher than the same month in 2019.
Fares between New York and Singapore were 45% higher at $887, while flights from Dubai to Frankfurt were 51% higher at $360.
Of the more than 300 total routes, 60 routes with at least one leg in North America set new highs in the last 12 months, including 7 routes that set new peaks in February .
Fares between Miami and Bridgetown, Barbados increased 126% in the year to February, and the price of a flight ticket between Los Angeles and Mexico City International nearly doubled. The year-over-year change in airfare is the highest since at least the year his 2014 data was first published. Available.
Passenger willingness to pay higher fares underscores the strong rebound in flight demand over the past year. Airlines enjoy a sharp turn in fortunes following the pandemic.
“Airlines are running out of exaggeration to explain the strength of demand,” Bernstein analyst Alex Irving said.
American Airlines reported record first-quarter earnings in its latest earnings, but Lufthansa said it expects adjusted earnings to surpass 2019 levels this spring. British Airways owners IAG and Air France are also predicting a successful summer. season of the week.
High demand for travel comes at a time when airlines are passing on costs such as fuel, labor costs, and a stronger dollar for non-U.S. airlines to customers.
Prices are also rising as many airlines fall behind in restructuring pre-pandemic flight schedules, in part due to a global shortage of aircraft.
Analysts said a relatively constrained supply of seats during a period of high demand supported prices, staving off a glut of new seats flooding the market and driving down fares.
IAG CEO Luis Gallego said it was “in our interest to offer competitive prices”. He added that the cost of doing so would need to be passed on.
Airlines typically forecast demand with “incredible accuracy”. That means he knows a year in advance which flights will be fully booked and can charge accordingly higher prices from the time the tickets are first sold. .
But the pandemic has complicated this model, he said, as demand patterns remain fluid. That means airlines are often reverting to a cruder model of raising prices in line with sales and raising prices for people who book at the last minute.
According to industry group Iata, airlines are one of the worst-hit sectors in the pandemic, and are rebuilding their finances after losing about $200 billion combined between 2020 and 2022.
The skyrocketing air ticket prices come amid growing scrutiny of companies using high inflation as a cover to opportunistically raise prices, a phenomenon known as ‘greedflation’.
Rory Bolland, travel editor for British consumer rights group Which?, said passengers should not suffer a repeat of the widespread travel disruptions seen last year.
“Prices and profits for many airlines have skyrocketed, so the bare minimum that passengers should receive in return is competent service,” he said.
But Hugh Aitken, vice president of strategic flights and industry partnerships at price-comparison website Skyscanner, said fares weren’t rising evenly and there was still a “deal” to be made.
“Even during busy times of travel like summer, prices are not rising on all routes, nor are they rising at the same rate,” he said.
