Do You Also Feel That Flight Tickets Are Way Too Expensive Right Now? This Is Why
In 2019, if someone were to tell you that the world will close up, flights won't be operating, countries would shut borders and travelling would be banned, you would think they are crazy, right?
But that really happened. The onset of one of the deadliest infections of our times -- COVID-19 -- brought our lives to a standstill in early 2020 and continued for two long years.?And, it has had an impact on pretty much everything from economy to trade, to the heath sector, jobs, education and even the aviation sector.?
Why are the tickets expensive?
Now, when the world is fully opening up, we're bearing the brunt of it and how (hint:?expensive plane tickets). But, why are the tickets so expensive anyway??Here's why.
People are looking for flights -- sometimes their first in years -- in a rush of what's been termed "revenge travel." Internet searches show sky-high airfares for many routes, yet travellers with wanderlust are opting to stomach the higher costs after being grounded for so long.
How bad is it?
¡°The demand is off the charts,¡± Delta Air Lines Inc. Chief Executive Officer Ed Bastian said at an industry conference last week, noting that fares this summer may be 30% higher than pre-pandemic levels. That essentially means, if a ticket to Bali costed??30,000 return, it'll now cost around??40,000.
¡°It¡¯s coming with leisure, it¡¯s coming with premium customers, it¡¯s coming with business, it¡¯s coming with international. It doesn¡¯t matter what the category is.¡±
What are some of the examples?
Searches for a return economy-class ticket between Hong Kong and London on Cathay Pacific Airways Ltd. in late June turn up prices as high as HK$42,051 ($5,360), which is more than five times the typical cost before the pandemic. Direct flights between New York and London around the same time cost more than $2,000 in economy.
Jacqueline Khoo, who works in tourism said her company paid S$5,000 ($3632) for a colleague¡¯s return trip with Singapore Airlines Ltd. to Hamburg later this month. That used to cost about S$2,000, she said. ¡°It¡¯s really amazing that an economy seat ticket would cost you so much.¡±
Which tickets are the most expensive?
A Mastercard Economics Institute study found the cost of flying from Singapore was on average 27% higher in April than in 2019, while flights from Australia were 20% more.
Increasingly, travellers are booking tickets months in advance as they¡¯re worried about the cost of buying at the last minute, said David Mann, chief economist for Asia Pacific, Middle East and Africa at the institute.
What are the other reasons?
Fewer planes
Another reason for high airline prices is, with fewer planes in the skies, there are fewer seats to meet the recovery in demand, which in turn has pushed up fares.
Carriers scaled down their networks during Covid, none more so than Cathay, which has been hemmed in by Hong Kong¡¯s onerous travel and quarantine rules. That¡¯s left people considering lengthy journeys with one or more stopovers, whereas before they might have flown direct.
?After navigating varied and changing government policies for the past two years, it will take time for airlines to rebuild fleets given that many restrictions only eased in May, said Subhas Menon, director general of the Association of Asia Pacific Airlines. ¡°It¡¯s still early days,¡± he said. ¡°We¡¯re just in June, so it¡¯s not like turning on the tap.¡±
Fuel prices
Russia¡¯s invasion of Ukraine has exacerbated a steady rise in crude oil prices over the past 18 months. Jet fuel now represents as much as 38% of an average airline¡¯s costs, up from 27% in the years leading to 2019. For some budget airlines, it can be as high as 50%.
Path to recovery
Aviation is a capital-intensive industry with historically wafer-thin margins. Covid has made that operating climate even more challenging: globally, airlines lost more than $200 billion in the three years to 2022.
Elevated fares provide carriers with a path to recover from losses and return to the black.
Re-hiring of staff
Hundreds of thousands of pilots, flight attendants, ground handlers and other aviation workers lost their jobs over the past couple of years. With travel picking up, the industry now finds itself unable to hire fast enough to allow for seamless operations at its pre-pandemic levels.
Unperturbed travellers
Higher ticket costs don¡¯t seem to be dissuading people from making trips now that many travel restrictions have eased. Some consumers are tapping dormant holiday budgets and upgrading to more expensive aircraft cabins for leisure trips, the International Air Transport Association¡¯s Director General Willie Walsh said last month.?
The so-called revenge traveler is ¡°an individual that has been emotionally affected by the lockdowns and has craved travel over the last two years and they¡¯ve dreamt about it,¡± said Hermione Joye, sector lead for travel in Asia Pacific at Alphabet Inc.¡¯s Google. ¡°They are very spontaneous.¡±
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