Global Airline Group IATA Warns of Soaring Airfares This Year

TEMPO.CO, Jakarta - The International Air Transport Association (IATA) estimated that airfares will likely be on the rise further starting this year. Among the causes are global inflation and the high costs of jet fuel, which accounts for about one-third of all airline expenses.

The IATA issued the warning at its annual meeting in Dubai, United Arab Emirates on Monday, June 3.

Limited Sustainable Fuels 

In addition to inflation, as the aviation sector faces global pressure to reduce its carbon footprint, more airlines are vying for the limited supply of sustainable aviation fuel or SAF on the market.

Although the SAF production is expected to triple by 2024, it will still only meet 0.53 percent of aviation fuel needs, far short of the two percent required by the European Union by 2025.

As reported by Euronews, Willie Walsh, director general of IATA, said airlines would continue to keep costs under control for the sake of consumers. “But I think it's unrealistic to expect that airlines can continue to absorb all of the costs. ... It's not something we like to do, but it's something we have to do.”

It is also attributable to the disruption in aircraft manufacturing over the past three years given the effects of the pandemic. As a result, many airlines continue to use older planes, which require more fuel to fly farther.

Stable Airline Ticket Prices

The increase would not be sudden, however. Data from aviation consultancy Cirium shows that domestic fares in Europe have been stable since the summer of last year. Transatlantic fares have fallen as more carriers have joined the lucrative transatlantic market.

“Airlines work so closely in understanding how everyone else is charging on the route, almost on an hourly basis,” said Cirium CEO Jeremy Bowen, adding that with increased capacity, airlines will open up routes and prices will probably fall.

Michael O'Leary, CEO of Ryanair Holdings Plc, also believed that airfares would remain stable through the summer, despite limited aircraft supply. 

Likewise, United Airlines Holdings Inc. Scott Kirby said it was "steady as it goes" with demand holding up but not increasing. Meanwhile, Emirates President Tim Clark said that despite strong demand heading into the summer, prices remained balanced.

EURONEWS | TRAVEL TOMORROW

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