Leisure travel is back in full swing and seasoned travellers are eager to secure seats to destinations further than their own backyard. Prior to the global pandemic, airlines competed healthily with affordable pricing, ample capacity, and schedules to suit a variety of budgets, allowing travelers to take a break from the nine-to-five grind. However, fast-forward three years, and an entire industry was decimated; resources reduced to a skeleton, supply chain disruptions still in play, not to mention the rise in inflation and fuel prices, have meant that the industry has to rebuild itself again at a cost and the increase in airfares has not gone unnoticed by disgruntled travellers.
But before you let your frustration get the better of you and unkind words slip out to the industry’s amazing staff, it’s important to understand the state of play. The changes that are occurring are for a reason, and it’s helpful to have an understanding of why.
A recent Forbes report sums up the state of play. “Airline ticket prices have climbed much faster than overall inflation during the pandemic recovery due to several factors. The industry ground to a virtual standstill in the earliest days of the pandemic and recovery was initially slow. Russia’s war in Ukraine has driven up fuel costs substantially and, in recent months, an extraordinarily strong rebound in travel demand has collided with massive challenges to supply, including labor shortages, aircraft delivery delays, and other issues.”
Here are some bite-sized facts that will help paint the picture and provide context to the increase in airfares. But, much of it comes down to the basic economics of supply and demand.
- When demand disappeared at the start of the pandemic, it forced airlines to cut the supply of flights until it returned. Airlines downsized their staff, dropped routes, and reduced flight frequencies, running just a fraction of their normal operations or less.
- Strong rebound in travel demand has collided with massive challenges to supply, including labor shortages, aircraft delivery delays, and other issues.
- Demand for travel has been more substantial than anticipated with restrictions now lifted, however, airlines have around 15% less capacity than in 2019 as airlines had to ground part of their fleet for various reasons. Demand is outweighing the supply with fewer seats to sell which results in higher flight prices.
- The price per gallon of airline fuel climbed from $1.98 in May 2021 to $3.90 in May 2022, an increase of 97% year-over-year.
- Fuel costs account for approximately 25-30% of an airline’s operating expenses.
- In response to the drop in demand caused by the pandemic, refineries shifted capacity away from jet fuels to other fuels, reducing the supply of jet fuel.
- Russia’s invasion of Ukraine in February 2022, led to a reduction in Russian crude oil exports. In addition, avoiding airspace due to war makes airline tickets more expensive, as the longer the aircraft remains flying, the higher the cost of fuel and labor.
- The pandemic also caused pilot training programs to be paused, reducing the number of new pilots who could take up the slack.
- Pilot training costs almost $100,000 per pilot and trainees are required to log 1,500 hours up in the air– the supply of trained pilots cannot increase as fast as demand.
- The pilot shortage has meant that the supply of air travel has not been able to meet the increasing demand, causing a surge in flight cancellations.
- The largest carriers have battled to attract pilots with dramatic pay increases. Ultimately, the pilot shortage has created an increase in airfares through supply reduction resulting from cancellations, flight schedule cutbacks, and increased operating costs.
- Airlines are still having to cut several routes and scale back their schedules due to continued labor shortages. For example, British Airways announced it would need to cut another 10,000 flights from its schedule through to March 2023.
Did you know?
- There were 46 million aviation jobs at risk during the pandemic. Under normal circumstances, aviation and tourism it facilitates support 87.7 million jobs worldwide.
- Direct aviation jobs (at airlines, airports, manufacturers, and air traffic management) fell by 2.3 million (a 21% reduction compared with the pre-pandemic situation)
- Nearly 39,200 special repatriation flights took nearly 5.4 million citizens home after borders closed in March 2020
- Nearly 46,400 special cargo flights transported 1.5 million tonnes of cargo, mostly medical equipment, to areas in need during the height of the pandemic response.
We know it can be frustrating to pay an increase in airfares for the privilege of taking a holiday or visiting loved ones, but let’s take a step back and look at the bigger picture. As the airline industry continues to recover and rebuild, it’s important to remember to be patient. Let’s not forget that they are not the enemy, and without them, many of citizens would have been stranded during the pandemic or without access to essential medical care.
There are still deals and promotions to be had, so keep your eyes and ears open and be ready to book in advance. If you don’t need to travel in peak season, then don’t. Look for opportunities in the shoulder or low seasons. Maybe consider a low-cost carrier instead of a full-service airline. For those seeking a new experience, think about trying a destination less travelled or where your exchange rate will get you more bang for your buck – leveling out the costs.
So while having to pay a little more to travel is not something any of us want, let’s keep a positive attitude and extend a little bit of understanding while the airline industry rebuilds.