• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 10 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 days They pay YOU to TAKE Natural Gas
  • 16 hours How Far Have We Really Gotten With Alternative Energy
  • 20 hours What fool thought this was a good idea...
  • 4 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 10 days The United States produced more crude oil than any nation, at any time.
Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

More Info

Premium Content

Airlines Will Struggle To Keep Flights Costs Down This Year

  • Following the pandemic, the price of flights soared as demand bounced back, inflation climbed, and fuel prices remained high.
  • In 2023, although everyone is expecting a challenging year, some analysts are optimistic that the average price will fall below the 2022 peak.
  • One of the major issues for airlines is the need to recoup losses made during the pandemic in 2022, all while dealing with continued bottlenecks across the sector.
Airlines

Flight prices have soared since the pandemic. But not everyone agrees on the outlook for 2023. Some believe high flight prices are here to stay, while others think the worst is already behind us. So, what can we expect to happen over the coming months and what are the main drivers behind these high flight prices?

After strict lockdowns in 2020 and 2021, which forced travelers to stay home and sent many airlines into administration, 2022 was a totally different story. Uptake for economy seats soared as people took to the skies once again, despite higher prices than before the pandemic. And experts predicted that demand for business travel would catch up by late 2022 going into 2023. A report from Hopper stated that international travel is set “for a big comeback,” after 62% of searches for 2023 flights in December last year were for international destinations. 

In February, domestic airfares in the U.S. were around 20% higher than during the same period last year. And economy fares originating in the U.K. were 36% higher. While prices have risen to a similar level to the pre-pandemic period, this has been shocking to consumers who have gotten used to lower-cost flights. But some airports and routes have been hit harder than others, meaning regular fliers are noticing the difference. Hayley Berg, an economist at Hopper, explained “though the national average looks pretty normal to us in comparison to pre-pandemic prices, for a lot of travelers a route that they may have taken for years and years to a smaller, more regional airport – that might be two or three times more expensive than what they paid pre-pandemic.”

One of the main drivers for higher prices in 2023 is the anticipated rise in demand for both domestic and international flights. Last summer we saw the results of a dramatic increase in passengers, with bottlenecks at airports causing major delays and cancellations worldwide. And demand is expected to grow even higher this year. While airlines have gradually begun to hire more staff and put precautions in place for this rise – something that was severely lacking in the post-pandemic period – there is a risk that demand could outstrip supply, driving prices up. 

Several aviation experts have commented on the expected increase in demand for summer 2023. According to Eurocontrol, “Getting closer to pre-pandemic traffic levels will not be easy against a backdrop of supply chain issues, possible industrial action, airspace unavailability, sector bottlenecks, rising demand and system changes.” Meanwhile, the air traffic management body stated that 2023 will be a “hugely challenging” year and will require a lot of effort to meet demand and keep delays down. And the CEO of Ryanair, Michael O’Leary, said the aviation industry would need to “pull out all the stops” to contend with the multitude of potential challenges this coming summer. 

Another factor that could mean higher prices is the desire for airlines to boost their profits. Airlines worldwide were hit particularly hard by the pandemic, having to halt operations almost completely and lay off hundreds of thousands of employees. Many went bankrupt and those that survived saw their profits plummet. In addition, many airlines offered customers flight vouchers to use after the pandemic, meaning that many flights were ferrying people around the world for (basically) free. But after a successful 2022 of attracting passengers back to their planes, airlines will be looking to increase profits, having established a solid customer base. 

As airlines face inflation and fuel price rises, they are not likely to absorb the same costs they did in 2021 and 2022 to attract customers to use their services. In addition, to respond to the rising demand, airlines will have to invest in staff, equipment, and technology and they’ll need the money to pay for all this. Further, the pandemic provided a warning to airlines that thought they were secure in their position before Covid hit. Many airlines will be looking to build up their funds to ensure any other disaster that might arise will not be so threatening to their survival. 

But despite many predicting higher prices for 2023, others are optimistic that flight prices will eventually fall from 2022 levels. In the last week of January, the average leisure flight price on top domestic routes was $289, 71% higher than in 2019. Average airfares are expected to peak at $350 in the U.S. in the summer. This may sound a lot but it’s actually lower than last year’s peak of $400. This is due to the lower capacity of flights seen last summer, following the pandemic. Berg stated, “We expect prices to be lower than last year because we’re not going to have that bubble of very intense recent travel demand combined with very low capacity from airlines.” Berg also highlighted the sharp rise in jet fuel prices between January and May 2022, which led to higher-cost flights.

During the post-pandemic period, and in wake of the Russia-Ukraine conflict, consumers are gradually getting used to high flight prices – although they’re unlikely happy about this situation. Experts have made it clear that a mix of challenges to the aviation industry and a need to make profits once again will sustain high flight prices. Although it is unclear to what extent prices will continue to rise, with the potential for flight prices to plateau in the summer at a slightly lower level than last year.

By Felicity Bradstock for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News