Airlines are capitalising on low competition and pent-up demand
Unexpectedly, in the first quarter of 2023, despite a progressive increase in traffic, domestic airfares have continued to increase in several markets, says ACI Asia-Pacific, including India, Indonesia, Saudi Arabia, South Korea and Japan, only decreasing marginally on international routes.
Airlines are capitalising on low competition and pent-up demand to increase profits and recover losses incurred during the pandemic, says ACI Asia-Pacific, while airports continue to provide enhanced services to passengers despite incurring heavy operational and capital expenditures.
ACI Asia-Pacific: ‘Excessive airfares threaten the industry's long term recovery’
"These excessive airfares threaten the industry's long term recovery and may have a far reaching influence on the associated industry by reducing demand for air travel," says ACI Asia-Pacific director general Stefano Baronci.
He argues that airlines “should exercise fair pricing that supports recovery and safeguards consumers' interests”.
“A supply-demand imbalance should not be exploited by airlines at the expense of customers by restricting the capacity, especially international one which is a key driver of social and economic growth and a major source of revenues for the airport sector," he adds.
Fuel prices and inflation impacting airfare increase
Factors such as fuel prices and inflation are acknowledged by ACI Asia-Pacific has being responsible for a significant portion of airfare increase. Fuel prices went up 76% in 2022 compared to 2019. The airlines’ costs increased as the Consumer Price Index saw an average 10% increase over the same period.
ACI Asia-Pacific: airports have made ‘tremendous efforts’ to support airlines
Despite a decrease in passengers and continuous financial losses, airports have made “tremendous efforts” to support airline partners during the crisis, according to ACI Asia-Pacific. They accomplished this by freezing or reducing airport charges, including landing, parking, and passenger fees, and providing incentives at the peak of the pandemic, it says.