European air passengers are flying despite economic pressures and are paying less inflationary prices to do so than they are for other items on their shopping lists, according to International Air Transport Association (IATA) data.
“Undercutting inflation”
The new figures were released at mid-November’s Wings of Change Europe (WOCE) event, a flagship aviation conference held in Amsterdam, and sponsored by KLM and others. They show that air fares in Europe are “undercutting inflation”, IATA said in a press release.
That does not mean that air fares are not rising. Since 2019, the pre-Covid-19 benchmark year that some appear to be wearying of hearing about, air fares have risen by about 16%. Perhaps surprisingly, that is still a smaller increase than has been seen across the EU’s average consumer price index – which in June was sitting at 20% above pre-pandemic levels.
“Significant achievement”
Consumers are well aware of the wallet-crunching effects of inflation, surveys this year and last have shown. Across various sectors, supply-and-demand problems driven by Covid-19 shutdowns, the subsequent invasion of Ukraine and the search for alternative sources of energy and raw materials have driven up prices of a range of goods. But, despite knowing they needed to cut back, consumers expressed confidence in their ability to make savings in certain areas, in order to prioritise longed-for post-Covid travel and dream vacations.
This has translated into a buoyant aviation sector. With 2023’s traffic at 3.6% below 2019, the sector is “on track to exceed the 2019 benchmark in 2024”, said IATA’s Director General, Willie Walsh, who suggested the industry had done well to avoid passing the “volatility of jet fuel prices and increases in workforce salaries” as well as “continually increasing charges being pushed by our infrastructure suppliers” on to consumers. “Holding air fare inflation at 16% – four percentage points below the rises that we have seen in the broader consumer price index” was “a significant achievement”, he said.
Competitive
The infrastructure charges Walsh refers to might include airport charges and fees imposed by air navigation and management bodies. Some increases there have been controversial, such as a 56% hike at London’s Heathrow and a 26% increase imposed by NATS, the UK’s air navigation manager, even though there was a catastrophic failure of systems that caused airlines huge headaches and mass cancellations over one of the UK’s main public holidays this year. Ryanair’s Michael O’Leary regularly complains about such charges in various jurisdictions, saying they are putting connectivity and business at risk.
Yet, IATA has now endorsed Europe’s regulators, saying they have played “a crucial role in generating the conditions under which airline competition has been able to thrive. European regulators can take credit for ensuring a light-touch consumer regulation which has enabled airlines to create tremendous consumer choice and flexibility,” Walsh said.
This could be great news for flyers because the “recovery of Europe’s air transport market is bringing with it even more competitive market conditions,” Walsh added. “Consumers will see that with more routes and more airlines to choose from. In total, last year saw 20 new airlines born in Europe. This is important because a more competitive air transport market will make Europe a more competitive place to do business,” he explained.
