Inflation, jet fuel costs and decarbonisation: Here’s why airfares are going to continue going up

07.06.2024 - 03:17 / euronews.com / Willie Walsh / Tim Clark

The cost of your next flight is likely to go up, according to industry experts.

That's the word from the International Air Transport Association, which held its annual meeting on Monday in Dubai, home to long-haul carrier Emirates.

While airlines continue to recover from worldwide groundings during the coronavirus pandemic, industry leaders told journalists that there are several costs likely to push ticket prices ever higher.

Part of that comes from worldwide inflation, an ongoing problem since the pandemic started. Jet fuel costs, roughly a third of all airline expenses, remain high.

Meanwhile, a global push for the aviation industry to decarbonize has more carriers fighting for the little amount of so-called sustainable aviation fuel, or SAF, available in the market.

"The airlines will continue to do everything they can to keep costs in control as much as possible for the benefit of consumers," said Willie Walsh, the director-general of the the International Air Transport Association, an industry-trade group.

"But I think it's unrealistic to expect that airlines can continue to absorb all of the costs. ... It's not something we like to do, but it's something we have to do."

Also pressuring the industry is a pandemic hangover in aircraft production as well, they say.

Carriers now keep older planes that burn more fuel flying longer. There also aren't enough new aircraft to expand routes and increase supply to bring down overall prices.

That warning comes as the IATA estimates globally, airline revenue will reach nearly €1 trillion in 2024, a record high.

There will be 4.96 billion travellers on airplanes this year, with total expenses for carriers reaching $936 billion (€862 billion) - another record high.

But industry profits also are expected to be nearly $60 billion (€55 billion) this year.

In particular, Emirates, a main driver for Dubai's economy, saw record profits in 2023.

The Emirates' results track with those for its base, Dubai International Airport. The world's busiest airport for international travellers had 86.9 million passengers last year, surpassing numbers for 2019 just before the coronavirus pandemic grounded global aviation.

Tim Clark, the airline's president, obliquely acknowledged that Monday by saying that he didn't want people to "get boxes of tissues out and play the violins" when warning that the industry's profit margins sit in the low single digits.

However, he contended that as airlines have grown larger and carriers consolidated, cost savings have quietly been passed onto consumers now able to book flights across the world.

"It is quite amazing that ticket prices are where they are today," Clark said. "I think the value-for-money proposition that the consumers have had the benefit