The cost of your next flight may go up.
That was the message from the International Air Transport Association at its annual meeting on Monday in Dubai, home of long-haul carrier Emirates.
Even as airlines around the world recover from the shutdowns caused by the coronavirus pandemic, industry leaders told reporters there are several costs that could further push up ticket prices.
Part of the reason is global inflation, a persistent problem since the pandemic began. Jet fuel costs, which account for about a third of all airline expenses, remain stubbornly high. Meanwhile, the global push to decarbonize the aviation industry has more airlines vying for a small amount of so-called sustainable aviation fuel (SAF) on the market.
“Airlines will continue to do everything they can to control costs for the benefit of consumers,” said Willie Walsh, director general of the International Air Transport Association, an industry trade group. “But I think it’s unrealistic to expect airlines to continue to absorb all the costs. … It’s not something we enjoy doing, but it’s something we have to do.”
They said the pandemic's impact on aircraft production was also weighing on the industry, with airlines now keeping older, more fuel-guzzling planes to fly longer. And there weren't enough new planes to expand routes and increase supply, which would have lowered overall prices.
The International Air Transport Association estimates that global aviation revenues will reach nearly $1 trillion in 2024, a record high. This year, 4.96 billion passengers will fly and airlines will spend a total of $936 billion, another record high.
Financial News and Insights
Delivered to your email inbox every Saturday.
But industry profits are also expected to reach nearly $60 billion this year.
In particular, Emirates Airlines, which is the main driving force of Dubai's economy, had revenue of $33 billion and a record profit of $4.7 billion in 2023.
Emirates' performance is in line with that of its home base, Dubai International, the world's busiest airport for international passengers, with 86.9 million passengers last year, more than it had seen before the coronavirus pandemic grounded global aviation in 2019.
The airport is currently planned to move to a second large airport in the city-state's southern desert region within the next 10 years, a project that will involve an investment of nearly $35 billion.
Airline President Tim Clark indirectly acknowledged as much on Monday, warning that the industry was operating at single-digit profit margins and that he didn't want people to “get out boxes of tissues and play violin.” However, he argued that as airlines have grown larger and airlines have merged, cost savings have been quietly passed on to consumers who can now book flights around the world.
“It’s amazing that fares have held up at the levels they have,” Clark said. “I think the value for money proposition that consumers have benefited from for decades is one of the hidden parts of the story.”
RwandaAir CEO Yvonne Manzi Makolo also highlighted taxes levied on airlines by the countries they operate in. She specifically said that taxes paid by airlines flying from African countries were “already ridiculously high.”
© 2024 The Canadian Press
