Why is it difficult to find cheap flights now? 5 reasons for high ticket prices

For more than two years, the main topic of conversation almost everywhere has been the impact of Covid-19. Now that the worst pandemic seems to be over and people are free to travel again, there is another hot topic in everyone’s language: expensive plane tickets.

People are looking for flights – sometimes the first in many years – in a rush of so-called “revenge”. Internet searches show exorbitant ticket prices for many routes, but travelers looking to travel prefer to endure higher costs after being delayed for so long.

“Demand is outstripping” CEO of Delta Air Lines Inc. Ed Bastian said at an industry conference last week, noting that ticket prices this summer could be 30% higher than before the pandemic. “It comes with vacations, it comes with premium customers, it comes with business, it comes with international. It doesn’t matter what category. “

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Travelers are waiting at Schiphol Airport in Amsterdam on June 3.

Photographer: Robin van Lonkheisen / ANP / AFP / Getty Images

Global movement

This trend is observed in different geographical regions, although some places are more cramped than others. Looking for an economy class return ticket between Hong Kong and London Cathay Pacific Airways Ltd. at the end of June, it raised prices to Hong Kong $ 42,051 ($ 5,360), more than five times the typical cost of a pandemic. Direct flights between New York and London at about the same time cost more than $ 2,000.

“Ticket prices are very high today,” said Jacqueline Hu, a tourism worker. Her company paid 5,000 Singapore dollars ($ 3,632) for a return trip from a colleague from Singapore Airlines Ltd. to Hamburg later this month. It used to cost about 2,000 Singapore dollars, she said. “It’s very strange that a ticket to an economic place is so expensive for you.”

A study by the Mastercard Economics Institute found that the cost of flights from Singapore in April was on average 27% higher than in 2019, while flights from Australia were 20% higher. Increasingly, travelers are booking tickets for the month ahead because they are concerned about last-minute purchase prices, said David Mann, the institute’s chief economist in the Asia-Pacific region, the Middle East and Africa.

Ticket prices are rising as the world reopens for travel

There are several reasons for higher fares, not all of which are controlled by airlines.

Giant jets are parked

Carriers are wary of returning all their aircraft that are not working, although most countries have eased cross-border restrictions. This is especially true for such giant aircraft Superjumbos A380 Airbus SE and Boeing Co.’s senior 747-8 as airlines turn to more economical models such as the A350 and 787 Dreamliners. The worst situation is in Asia, which has been slow to lift restrictions, and China, the largest market in the region, remains virtually closed.

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The aircraft retained the TARMAC Aerosave in southwestern France in 2021.

Photographer: Lionel Bonaventure / AFP / Getty Images

After navigating a diverse and volatile government policy over the past two years, airlines need time to rebuild their fleets, given that many restrictions were eased only in May, said Subhas Menon, CEO of the Asia-Pacific Airlines Association. “It’s too early,” he said. “We’re only in June, so it’s not like opening the tap.”

Carriers also cut their networks during Covid, no more than Cathay, which was limited by burdensome travel rules and quarantine Hong Kong. This left people who considered long journeys with one or more stops, whereas previously they could fly a direct flight. Currently, British Airways Plc does not even fly to Hong Kong.

With fewer planes in the sky, there are fewer seats to meet the recovery in demand, which in turn has raised ticket prices.

Rapid fuel prices

Russia’s invasion of Ukraine has intensified the steady rise in oil prices over the past 18 months. Jet fuel now accounts for 38% of the airline’s average costs, compared to 27% in 2019. For some budget airlines, this can reach 50%.

Spot jet fuel prices in New York have risen more than 80% this year, although prices vary from region to region depending on refining costs and local taxes. Many American carriers have been able to cover the increased fuel costs, but only by passing them on to travelers in the form of higher tariffs.

Some investors believe that airlines may seek to raise fuel fees to cope with this, analysts from Citigroup Inc. stated in March. Most Asian airlines do not hedge aviation fuel, which means that they are more vulnerable to rising prices.

Deep pocket travelers

The higher cost of tickets doesn’t seem to deter people from traveling now that many travel restrictions have eased. Some consumers use vacation budgets and upgrade to more expensive showrooms for leisure travel, This was announced last month by the Director General of the International Air Transport Association Willie Walsh.

The so-called revenge traveler is “a person who has been emotionally affected by quarantine and wanted to travel for the past two years, and they have been dreaming about it,” said Hermione Joy, head of travel in the Asia-Pacific region. Google from Alphabet Inc. “They are very spontaneous.”

Inside the Singapore Air Show

Airbus A350-1000

Photographer: Lauryn Ishak / Bloomberg

Lack of staff

Hundreds of thousands of pilots, flight attendants, ground workers and other aviation workers have lost their jobs over the past few years. As travel increases, the industry is unable to hire workers fast enough to ensure uninterrupted work at the pre-pandemic level.

Read more: Fewer pilots will lead to flight cancellations in the summer

Singapore Changi Airport, which is regularly recognized as the best in the world, is seeks to recruit more than 6,600 people. Many of the laid-off workers have found another, less volatile profession and are reluctant to return to the cyclical industry. The operator at Changi offers the auxiliary police an attached bonus of Singapore $ 25,000, a job that pays a maximum of Singapore $ 3,700 per month.

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In the United States, smaller regional airlines cannot fly at full capacity because larger carriers have hired too many pilots. Hundreds of flights have been canceled in the UK, disrupting holiday plans and leading to long delays and scenes when passengers sleep at airports. In Europe, large airports have faced delays and cancellations because they have not hired the right staff. This disrupted airline schedules and increased costs.

Repair of balances

Aviation is a capital-intensive industry with historically low profitability. Covid has made this working climate even more difficult: airlines around the world have lost more than $ 200 billion over three years until 2022.

Increased tariffs give carriers a way to recover from losses and return to the black.

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