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The runaway rise in air fares driven by the sharp rebound in post-pandemic travel demand slowed in 2023, but travellers still face prices well above 2019 levels on many of the world’s most popular routes.
Average ticket prices on more than 600 routes rose at an annual rate of 2.1 per cent in September, the latest month for which data is available, down from double-digit growth at the start of the year, according to a Financial Times analysis of data from aviation company Cirium.
Airlines have faced criticism for the rise in ticket prices, which has come as high demand for travel has coincided with a shortage of global aircraft. Industry costs including fuel and staff have also risen.
The EU told the FT in November that it has been “looking into the details” of what has caused fare rises in the region, the Italian government threatened to impose pricing caps on some routes and European airports have also questioned the price jumps.
But the growth in air fares has now dipped below the rate of US inflation, a proxy for inflation in developed economies, which was 3.7 per cent in September.
The data analysed prices on popular routes and used average one-way fares in economy seating, excluding taxes and fees.
The figures showed that prices stabilised in 2023 but are still well above pre-pandemic levels on many routes.
The average one-way economy class transatlantic flight from London Heathrow to New York’s JFK was $343 in September, 19 per cent higher than in 2019.
Fares between Singapore and Sydney were more than $100 higher than in the same month in 2019.
Airlines across the world, from Ryanair to Singapore Airlines, have reported record profits, particularly through the summer months in the northern hemisphere.
Global airline revenues for 2023 are forecast to reach a record $896bn.
But as more aircraft take to the skies, analysts have warned that an oversupply of flights in the market could push down prices.
“There remains some nervousness from investors around the sustainability of elevated demand [in Europe] post-summer, and whether we see a correction in profitability . . . Given plans for capacity growth into [2024]; it remains to be seen if yields can hold at their elevated levels,” analysts at JPMorgan said in a recent note.
There have already been some signs of oversupply in the US market, forcing many airlines to cut fares. Southwestern Airlines said in December that it expects revenue for each available seat flown per mile — a closely watched metric — to dip 10 per cent year on year in the fourth quarter.
Three senior airline executives said they were concerned that profitability on seat sales would not be able to sustain their momentum in 2024, even if none predicted a sharp decline back to 2019 levels.
Rob Morris, head of global consultancy at Cirium’s consultancy arm Ascend, said signs of a slowdown could mean that the industry faces the prospect of costs rising faster than ticket prices.
“[It is] not a happy place to be,” he added.