Airfares are rising at more than double the rate of inflation as carriers cash in growing demand for travel which has defied broader economic headwinds.
Average ticket prices on more than 600 of the world’s most popular routes rose at an annual rate of 27.4% in February, the latest month for which data is available, marking the 15th consecutive month of double-digit growth. according to a Financial Times analysis of data from the airline Cirium.
In contrast, US inflation, a gauge of global inflation in developed economies, grew by less than half over the same period.
The data analyzed prices on popular routes flown around the world and used average economy class one-way fares, excluding taxes and fees.
This year has seen significant price increases on many routes, compared to pre-pandemic levels.
The average one-way economy class transatlantic flight from London Heathrow to JFK in New York was $343 in February this year, 23% more than in the same month in 2019.
Fares between New York and Singapore increased 45% to $887, while tickets from Dubai to Frankfurt increased 51% to $360.
Sixty routes with at least one stop in North America out of a total of more than 300 routes set new highs in the past 12 months, including seven set a new high in February.
Fares between Miami and Bridgetown, Barbados, grew 126 percent in the year through February and ticket prices between Los Angeles and Mexico City International nearly doubled — the highest annual change in airfares since at least 2014, the former year for which data is available.
Passengers’ willingness to pay high fares underscores the furious recovery in demand for flights over the past year, and how airlines are enjoying a sharp turnaround in fortunes following the pandemic.
“Airlines are running out of hyperbole to describe the strength of demand,” said Bernstein analyst Alex Irving.
American Airlines reported record first-quarter revenue in its most recent results, while Lufthansa said it expects adjusted earnings to surpass 2019 levels this spring. British Airways owner IAG and Air France are also predicting an outstanding summer seasons this week.
The high travel demand comes as airlines pass on high costs to customers, including fuel, labor and the strong dollar to non-US carriers.
Prices have also risen because many carriers have been slow to rebuild their pre-pandemic flight schedules, in part due to global aircraft shortages.
Analysts said the relatively tight supply of seats at a time of high demand helped prop up prices and prevented a glut of new capacity from flooding the market and driving fares down.
Luis Gallego, chief executive of IAG, said that “it is in our best interest to offer competitive prices.” But he added that airlines needed to pass on rising costs in the context of “high inflation”.
Airlines typically predict demand with “incredible accuracy,” meaning they know a year in advance which flights will be full and can charge steep fares since tickets first go on sale in response, he said. Oliver Ranson, chief executive officer of the Airline Revenue Economics consultancy.
But he said the pandemic has complicated this model as demand patterns are still evolving, meaning airlines have often reverted to a more crude model of raising prices in line with sales and raising prices for airlines. people who book last minute.
Airlines have been one of the hardest-hit sectors during the pandemic and are rebuilding their finances after losing a total of nearly $200 billion between 2020 and 2022, according to industry body Iata.
High ticket prices result from a growing scrutiny of companies using high inflation as a hedge to raise prices opportunistically, a phenomenon dubbed “greed”.
Rory Bolland, travel editor at UK consumer rights group Which?, said passengers should not suffer a repeat of the widespread travel disruption seen last year.
“Many airlines’ prices and profits are soaring, so the least passengers should get in return is competent service,” he said.
However, Hugh Aitken, vice president for strategic flights and industry partnerships at price comparison website Skyscanner, said there were still “deals” to be struck, as fares don’t increase evenly.
“Even during busy travel times like summer, prices don’t go up on all routes, or at the same rate,” he said.
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