Rising jet fuel prices amid strong travel demand will inevitably lead to more expensive air travel in Europe. This is warned by both the representatives of the aviation industry themselves and research analysts. Tickets for 7 or 10 euros will no longer be available.
TICKETS RAISE FOR MANY REASONS
a week's vacation could visit up to three countries and not go broke. A flight on a low-cost airline cost from 7 to 40 euros.
In the medium term, such low prices will have to be forgotten. A new study by Allianz Trade has confirmed that the current problems in the aviation and tourism industry are far from short-term. According to the analysts' conclusions, due to the accumulated problems and new challenges, airlines simply have no other choice but to increase airfare.
There are several reasons. The first of these is an almost two-fold increase in jet fuel prices (+89% YTD), which is why carriers are forced to optimize schedules and cancel flights in order to save money.
The second factor is the gradual transition to “greener” and naturally more expensive fuel (SAF, 2.5 times more expensive than normal), which is an even bigger headache for airlines in Europe, given the growing competition from rail operators. The mandatory SAF/kerosene ratio (38%/62%) by 2045 will increase fuel costs for carriers by another 57%.
Added to this is the need to renew the fleet in the face of higher lending rates, higher staff salaries and rising costs for airport services. According to Allianz Trade, airfare prices will rise another 21% in 2022 alone, making both domestic and international flights much more expensive than they already are.
ECONOMY FLIGHT AT THE PRICE OF BUSINESS CLASS
As an example, analysts cite the pricing of such popular airlines as Ryanair, Lufthansa and KLM: these carriers limited the sale of cheap tickets in July due to rising fuel prices and forced flight cancellations.
Lufthansa said it was suspending the sale of low-cost fares “for a short period of a few days” so that passengers affected by flight cancellations can rebook. While the special measures were in place, travel was charged at a flat rate of €500 per flight, resulting in even return flights within Germany costing €1,000.
AirFrance-KLM management also said it would “strongly limit” the sale of remaining tickets to European destinations on flights operated by KLM and its regional airline KLM Cityhopper.
This results in the cheapest flight, according to Google Flights economy class from London to Amsterdam round trip in July on KLM flights cost $850, compared to about $165 last month.
Allianz estimates that even such significant fare adjustments will not be enough to help airlines recover from losses for the third year in a row. According to the experts' conclusions, European airlines will not be able to reach the break-even point until at least 2023, which will lead to even greater price increases.
There WILL NOT BE 7 EURO TICKETS
Ryanair CEO Michael O'Leary thinks Europe's era of super-cheap airfare is coming to an end. “Looking at current prices, it’s really hard to believe that we could once book flights within the EU for as little as 7 euros,” he said.
O’Leary predicts that by 2025 the average the cost of tickets for budget flights will increase by 50%: there will be no tickets below 50-60 euros at all. Until 2022, for 60 euros, you could buy a ticket for a Ryanair flight at the Plus fare with an extended seat selection and 20 kg of luggage.
Lufthansa CEO Jens agrees with the head of Ryanair Ritter. In his opinion, “the entire aviation industry is suffering and under enormous pressure.” Therefore, there is “no indication that airfare will ever return to pre-2022 levels.”