The cost of your next flight is likely to go up, according to industry leaders.
While carriers recover from the groundings worldwide from the coronavirus pandemic, there are several costs likely to push ticket prices ever higher, according to the International Air Transport Association (IATA), which held its annual meeting in Dubai.
Part of the problem stems from worldwide inflation, an ongoing problem since the pandemic started.
Sir Tim Clark, President of @Emirates: “In today’s complex world, dialogue in #aviation is crucial. Hosting the 80th #IATAAGM in Dubai, 🇦🇪 home to +100 ✈️ ✈️, underscores the vital role aviation plays in the country’s prosperity and future.” pic.twitter.com/lWdGsU5Qj3
— IATA (@IATA) June 3, 2024
Jet fuel costs, roughly a third of all airline expenses, remain high.
Meanwhile, a global push for the aviation industry to decarbonise has more carriers fighting for the little amount of so-called sustainable aviation fuel (SAF) available on the market.
IATA director-general Willie Walsh said: “The airlines will continue to do everything they can to keep costs in control as much as possible for the benefit of consumers.
“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.”
Increasing pressure on the industry is a pandemic hangover in aircraft production as well, the ATA said.
In a 🌎 of many and growing uncertainties, #airlines continue to shore-up their profitability. An aggregate return above the cost of capital, however, continues to elude the global ✈️ industry.
Outlook for 2024 👇 https://t.co/gwXJIDwpeq#IATAAGM pic.twitter.com/KDF26wBO7Z
— IATA (@IATA) June 3, 2024
Carriers now keep older planes that burn more fuel flying longer. There also are not enough new aircraft to expand routes and increase supply to bring down overall prices.
That warning comes as the IATA estimates that globally, airline revenue will reach nearly $1 trillion (€900 billion) in 2024 – a record high.
There will be 4.96 billion travellers on planes this year, with total expenses for carriers reaching $936 billion dollars (€863 billion) – another record high.
But industry profits also are expected to be nearly £60 billion this year.
In particular, Emirates, a main driver for Dubai’s economy, saw record profits of $4.7 billion in 2023 off revenues of $33 billion.
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.
Curious to know who’s on the IATA Board of Governors (BoG) ❔ ❔
Here’s a 📷 from the #IATAAGM with Pieter Elbers, CEO of @IndiGo6E as he assumes his duties as Chair of the BoG.
He succeeds @FlyRwandAir CEO, Yvonne Manzi Makolo who will continue to serve on the BoG. pic.twitter.com/7HaA5T3LEN
— IATA (@IATA) June 3, 2024
The airport now plans to move to the city-state’s second, sprawling airfield in its southern desert reaches in the next 10 years in a project worth nearly $35 billion.
Tim Clark, the airline’s president, obliquely acknowledged that Monday by saying that he did not 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,” Mr Clark said.
“I think the value-for-money proposition that the consumers have had the benefit from for many decades is something that is one of those hidden bits of the narrative.”
Yvonne Manzi Makolo, the chief executive of RwandAir, also highlighted the taxes and fees imposed on carriers by the countries they operate in.
She specifically cited those paid by carriers flying out of African nations as “already ridiculous”.
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