The cost of your next flight will likely increase.
That’s the word from the International Air Transport Association, which held its annual meeting on Monday in Dubai, home of long-haul airline Emirates.
As airlines recover from the global collisions caused by the coronavirus pandemic, industry leaders told journalists that there are several costs that are likely to continue to push up ticket prices.
Some of that comes from global inflation, an ongoing problem since the pandemic began. Jet fuel costs, about a third of all aviation costs, remain high. Meanwhile, a global push to decarbonize the aviation industry has more and more airlines competing for the small amount of so-called sustainable aviation fuel (SAF) available on the market.
“Airlines will continue to do everything they can to keep costs under control for the benefit of consumers,” said Willie Walsh, director general of the International Air Transport Association, an industry group. “But I think it is unrealistic to expect that airlines can continue to bear all costs. … It’s not something we like to do, but it’s something we have to do.”
The industry is also being pressured by a pandemic hangover in aircraft production, they say. Carriers are now allowing older aircraft that use more fuel to fly longer. There are also not enough new aircraft to expand routes and increase supply to lower overall prices.
That warning comes as IATA estimates airline revenues will reach nearly $1 trillion globally by 2024, a record high. There will be 4.96 billion travelers on planes this year, with total costs to airlines reaching $936 billion – another record high.
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But industry profits are also expected to reach nearly $60 billion this year.
In particular, Emirates, a key driver of Dubai’s economy, posted record profits of $4.7 billion on revenues of $33 billion in 2023.
The Emirates’ results are in line with those of their base, Dubai International Airport. The world’s busiest airport for international travelers had 86.9 million passengers last year, more than 2019’s tally, just before the coronavirus pandemic grounded global aviation.
The airport now plans to move to the city-state’s second, sprawling airport in the southern desert regions within the next decade, in a project worth nearly $35 billion.
Tim Clark, the airline’s president, acknowledged that indirectly on Monday, saying he didn’t want people to “get out boxes of tissues and start playing violins” when he warned that the industry’s profit margins are in the low single digits. However, he claimed that as airlines have grown bigger and airlines have consolidated, the cost savings have been quietly passed on to consumers who can now book flights around the world.
“It’s pretty amazing that ticket prices are where they are today,” Clark said. “I think the value for money that consumers have benefited from for decades is something that is one of those hidden pieces of the story.”
RwandAir CEO Yvonne Manzi Makolo also highlighted the taxes and fees imposed on airlines by the countries in which they operate. She specifically cited the taxes and fees paid by airlines flying from African countries as “already ridiculous.”
© 2024 The Canadian Press
