Though budget air fares might make us think otherwise, the cost of flying is becoming more and more expensive relative to inflation. But why? A range of factors are involved, from conflicts that have closed some countries’ airspace making routes longer, to rising jet fuel prices and increased demand.
Inflation and jet fuel prices are up
Inflation in the cost of living is running high generally, and airlines, like any employer, have to increase staff salaries accordingly.
Jet fuel costs are also up, and they represent the second biggest outlay for most airlines, after staff. With an increase of $22-a-barrel over four years and various conflicts and global instability pushing prices higher potentially, these costs seep through to consumers.
Conflicts and closed airspace
And when you’re paying more for fuel, the last thing you want is to have to use that fuel up on longer journeys, but that is what is happening, due to closed airspace over one of the world’s largest nations. Russia’s invasion of Ukraine in 2022 and the application of international sanctions caused a tit-for-tat, with Russia then closing its airspace to all but four European carriers: Belavia, Pegasus Airlines, Air Serbia, and Turkish Airlines. Chinese carriers too are allowed to overfly Russia, as are Gulf carriers such as Emirates, Etihad and Qatar.
With many of the world’s major airlines unable to overfly one of the world’s largest countries, they now have to take the long way round on many routes, adding hours of flight time and of course, using more fuel – that consumers have to pay for. Some routes are up to four hours longer, and Simple Flying cites examples including Japan Airlines’ Tokyo to London that now consumes 20% more fuel and Lufthansa’s Frankfurt to Tokyo service burning a massive 1,428 gallons of extra kerosene.
The Israel-Hamas war is another example where airlines are either flying around the problem or dropping flights from schedules – which contributes to the next issue: high demand and insufficient capacity.
High demand and insufficient capacity
Demand for travel is up. Post-Covid so-called “revenge travel” and consumers prioritising experiences have contributed to the recovery of the travel and tourism sector, with demand up by 21.5% from February 2023 to 2024 according to the International Air Travel Association (IATA). But the aviation sector, which slashed jobs when Covid hit, is still struggling to grow the capacity needed to cope, with Available Seat Kilometres only increasing by 18.7%.
To make matters worse, problems in global supply chains mean aircraft manufacturers are battling a huge backlog of orders, not only from a suite of the world’s commercial airlines but also from the individual market, where demand for private jets is on the rise. Materials such as metals and windshields can no longer be sourced from Ukraine, and semi-conductor chips are in short supply too.
Everybody knows that high demand and low supply pushes prices through the roof and that’s another reason why air fares are rising.
