4 reasons why airline ticket prices are “fiery” until 2030

Weather of Arabia - Many experts expect that ticket prices will continue to rise in the long term, despite the recent decline in oil prices, at a time when airlines seek to restore the number of passengers they recorded before the Covid-19 crisis, when price volatility reached its peak.

These increases are recorded despite the stability of oil prices, after they reached their peak after the start of the Ukraine crisis in February 2022.

The International Air Transport Association estimates that prices will fall this year to $98.5 per barrel, compared to $135.5 per barrel last year, according to The Independent.

Fuel represents between 25 and 30% of airlines' costs and usually has a significant impact on ticket prices. However, the decline in prices is long overdue.

There are many reasons why higher prices are likely to remain for a long time: labor costs and other costs associated with the supply chain are higher or rising, says Air Transport Association chief economist Mary Owens Thomsen.

“Companies need to find a way to cover these costs or they will start losing money again,” she said, while she is barely back in the safety zone and has to pay off huge debts from the COVID-19 crisis.

• The second reason is the increase in demand, as expressed by the expert in the aviation sector at the Center for Strategic Consulting "McKinsey" Vic Krishnan that the main issue is not "in oil prices as much as it lies in the lack of enough seats in the planes with a large number of passengers."

• The third reason is that aircraft orders are received late, although order books are sometimes complete until the end of the contract. Aircraft manufacturers struggle to meet their delivery targets due to parts or material shortages from their suppliers.

• The fourth reason is the cost of labor, and many companies have had to negotiate to raise the wages of pilots and cabin crew,” according to Geoffrey Weston, a consultant at Bain & Company.

This is also the case for ground operations companies that have had to "pay much higher salaries out of the COVID-19 crisis" for baggage handlers and technicians.

"There are not many factors that can reduce ticket prices," says Pascal Fabre, an expert in the aviation sector at Alex Partners.

But even though aviation will have to invest trillions of dollars to try to decarbonise by 2050 in new planes and renewable fuels, Mary Owens Thompson sees no respite for consumers.