Airfare costs will keep rising, warn aviation trade group and industry leaders

Expect an increase in flight costs in the near future.

The International Air Transport Association (IATA), during its annual meeting in Dubai, has indicated that several factors are set to push airline ticket prices higher as the industry recovers from the disruptions caused by the COVID-19 pandemic.

One of the primary drivers of these increased costs is global inflation, a persistent issue since the pandemic began. Additionally, the price of jet fuel, which constitutes about a third of an airline’s expenses, remains high. Moreover, as the aviation industry aims to reduce its carbon footprint, airlines are competing for the limited supply of sustainable aviation fuel (SAF) available in the market.

Willie Walsh, IATA’s director-general, emphasized the airlines’ commitment to managing costs for the benefit of consumers. However, he acknowledged the challenge of absorbing all rising expenses without passing some of the costs onto passengers.

Another challenge for the industry is the delayed production of new aircraft due to the pandemic. This has led airlines to continue using older, less fuel-efficient planes, and has limited their ability to expand routes and increase supply, which could help lower ticket prices.

IATA forecasts that airline revenues will nearly hit $1 trillion in 2024, setting a new record. This year, it is estimated that 4.96 billion people will travel by air, with total airline expenses reaching $936 billion, also a record high. Despite these high costs, the industry is expected to post profits of nearly $60 billion in 2024.

Emirates, a key player in Dubai’s economy, reported record profits of $4.7 billion in 2023, with revenues reaching $33 billion. Dubai International Airport, the world’s busiest for international travelers, saw 86.9 million passengers last year, surpassing pre-pandemic levels. Plans are underway to shift operations to a new airfield in the next decade, a project valued at nearly $35 billion.

Tim Clark, Emirates’ president, acknowledged the industry’s slim profit margins but noted that the growth and consolidation of airlines have brought cost savings to consumers, allowing for relatively stable ticket prices.

Yvonne Manzi Makolo, CEO of RwandAir, pointed out the high taxes and fees imposed on airlines by various countries, particularly highlighting the burdensome costs for carriers operating out of African nations.