Airline ticket prices are rising at more than twice the rate of inflation, as airlines benefit from growing demand for travel that is challenging broader economic headwinds.
Average ticket prices on more than 600 of the world’s most popular lines rose at an annual rate of 27.4 percent in February, the latest month for which data is available, the 15th consecutive month of double-digit growth, according to the Financial Times. Data analysis from the airline company Cirium.
By contrast, US inflation, a proxy for global inflation in advanced economies, grew by less than half that over the same period.
The data analyzed prices on popular routes around the world and used the average one-way fare in the economy, excluding taxes and fees.
And it found significant price hikes across many routes this year, compared to pre-pandemic levels.
An economy-class round-trip transatlantic flight from London Heathrow to New York’s JFK averaged $343 in February this year, up 23 percent from the same month in 2019.
Fares between New York and Singapore are up 45 percent at $887, while tickets from Dubai to Frankfurt are up 51 percent at $360.
Sixty trails with at least one stop in North America are among more than 300 that set new highs in the past 12 months, including seven that set a new peak in February.
Fares between Miami and Bridgetown, Barbados grew 126 percent in the year to February and fares between Los Angeles and Mexico City International nearly doubled — the highest annual changes in airfares since at least 2014, the first year for which the data is recorded. available.
Passengers’ willingness to pay high fares underscores the furious rebound in flying demand over the past year, and how airlines are enjoying a sharp turnaround in fortunes in the wake of the pandemic.
“Airlines are running out of hyperbole on demand,” said Alex Irving, an analyst at Bernstein.
American Airlines reported record first-quarter revenue in its latest results, while Lufthansa said it expects adjusted profit to exceed 2019 levels this spring. British Airways IAG and Air France also predicted bumper summers this week.
The high demand for travel comes at a time when airlines are passing high costs to customers, including fuel, labor and a strong dollar to non-U.S. carriers.
Prices have also soared because many airlines have been slow to rebuild their pre-pandemic flight schedules, in part due to a global shortage of planes.
Analysts said the relatively restricted supply of seats at a time of high demand helped prop up prices, and stopped a glut of new capacity flooding the market and driving down prices.
“It is in our interest to offer competitive pricing,” said Luis Gallego, CEO of IAG. But, he added, airlines need to pass on the rising costs in a “high inflation” environment.
Oliver Ranson, managing director of consultancy Airline Revenue Economics, said airlines typically forecast demand with “incredible accuracy,” meaning they know a year in advance what flights will be full, and can charge high fees from when tickets first go on sale. . .
But he said the pandemic has complicated that model because demand patterns are still in flux, which means airlines have often reverted to a cruder model of raising prices in line with sales, raising fares for people who book at the last minute.
Airlines have been one of the hardest hit sectors during the pandemic, and they are rebuilding their finances after a combined loss of nearly $200 billion between 2020 and 2022, according to industry body Iata.
The high ticket prices come amid increasing scrutiny of companies that use high inflation as a cover to opportunistically raise fares, a phenomenon dubbed “greedy inflation”.
said Rory Boland, travel editor for Which?
“Fares and profits on many airlines are going up, so the least number of passengers you have to receive in return is competent service,” he said.
However, Hugh Aitken, vice president of strategic flights and industry partnerships at price comparison website Skyscanner, said there are still “deals” to be made, because prices are not rising uniformly.
“Even during busy travel periods such as summer, fares do not rise on all routes nor at the same rate,” he said.