Unfair fares a threat to aviation recovery

Airports Council International accuses airlines of clawing their way back to profitability while airports drown in red ink.

Airports claim high airfares will impact demand, resulting in fewer airport visitors.
Airports claim high airfares will impact demand, resulting in fewer airport visitors. Photo Credit: Adobe Stock/pixardi

Almost anyone who has purchased an airline ticket of late knows there are no bargains to be had right now.

Yet, it’s not just passengers who are being whacked by high airfares “significantly above the global average”, according to Airports Council International (ACI).

Airports are suffering, too, and for the same reason.

ACI says elevated airfares represent a downside factor for full recovery of the travel economy “as these may suppress demand and therefore reduce the number of passengers”.

“Airports, on the other hand, need to get back to pre-pandemic traffic volumes in order to restore their economic equilibrium after a prolonged period of operating in the red.”

ACI has looked at the industry outlook for Asia Pacific and Middle East and found the increase in airfares are significantly above the global average with airline yields (revenue per RPK) that were 29% higher in 2022 than in 2019 in nominal terms.

“This is in sharp contrast to the financial health of airports, which are still losing money,” ACI added.

To understand the market dynamics of air fares in more detail, the world’s Top 15 busiest international routes in 2019 were analysed in detail by ACI.

All but one of these routes are in the Asia-Pacific and Middle East region – the exception being London Heathrow to New York JFK.

“Comparing monthly passengers in July 2022 versus July 2019 across these busiest routes reveals that in 2022, the number of passengers was down 66% and the average airfare was up 77%,” ACI said.

The largest airfare increase was reported on routes with strict travel restrictions and scarce frequencies and airlines competition, such as the ones connecting Hong Kong with Manila and Shanghai.  

Conversely, LHR-JFK passengers had already recovered to 89% of 2019 levels in July 2022 and the airfare increase was a more modest increase of 21%.

Stefano Baronci, director general, ACI Asia-Pacific said, “Despite a consolidated recovery of domestic traffic as compared to 2019 levels, and a progressive improvement of international traffic, with peak performances in Middle East and South Asia, the financial health of airport operators continued to be in distress, with 10 consecutive quarters in the red.

“Despite substantial efforts by airports to freeze or lower airport charges in 2022, the average 53% increase in airfares throughout 2022, compared to 2019, reveals a fundamental imbalance in the financial stability of the industry as well as pose a threat to the sector's full recovery in 2023.”

Source: Travel Weekly Asia