Brace yourself for higher airfares in the coming months. That’s the blunt message from global airline leaders who convened this week in Dubai for the International Air Transport Association’s (IATA) annual meeting.
While the industry recovers from pandemic-driven losses, several key factors are coalescing to push ticket prices upward, aviation executives warned. Sustained high fuel costs, inflationary pressures, and an accelerating push toward sustainable aviation fuels (SAFs) will all contribute to making flights more expensive.
“It’s not something we like to do, but it’s something we have to do,” said IATA Director General Willie Walsh about inevitably passing increased operational expenses to consumers through higher fares.
Jet fuel remains one of airlines’ biggest expenditures at roughly one-third of overall costs. With supplies still tight from refinery disruptions, fuel prices have stayed elevated despite COVID’s impacts waning.
Additionally, a concerted industry effort to reduce carbon emissions by transitioning to sustainable fuel sources has ramped up demand and competition for the limited SAF supplies currently available.
Beyond fuel, carriers also face lingering pandemic effects like production backlogs delaying new, more efficient aircraft deliveries. This forces airlines to keep older, less fuel-efficient planes in service longer.
“The airlines will continue to do everything they can to keep costs in control…for the benefit of consumers,” Walsh stated. “But I think it’s unrealistic to expect that airlines can continue to absorb all of the costs.”
The outlook casts a shadow over the aviation industry’s robust rebound, with IATA projecting record global airline revenues approaching $1 trillion in 2024 amid resurgent travel demand lifting total passengers to nearly 5 billion.
However, the expected $60 billion in total profits reflects a low-single-digit margin as surging expenses erode potential windfalls from reopened travel corridors.
“I don’t want people to get boxes of tissues out…when warning that the industry’s profit margins sit in the low single digits,” remarked Emirates President Tim Clark, while defending the value proposition airlines provide despite escalating costs.
RwandAir CEO Yvonne Manzi Makolo echoed frustrations over taxes and fees burdening African carriers as the continent’s travel ramps back up.
While soaring fares are an unwelcome development for consumers, airline leaders insist they are unavoidable realities stemming from simultaneous economic and environmental pressures enveloping commercial aviation’s pandemic recovery.