Significantly higher kerosene prices, plus severe staff shortages: Flying is not only becoming more expensive, it will probably remain as difficult as it is at present. According to a study, cancellations of flights could become the norm. Accordingly, the aircraft will lose market share.
According to an analysis by the credit insurer Allianz Trade, air passengers in Europe must be prepared for persistently difficult times. According to a study, ticket prices will rise sharply this year. The airlines would still have no financial leeway to remedy their staffing misery. The flight cancellations that are so frequent at the moment could become the norm. In the medium term, the financial experts in European traffic also expect advantages for the more environmentally friendly railway.
The airlines have already raised ticket prices significantly as a result of the sharp rise in kerosene prices (plus 89 percent) since the beginning of the year, as the study shows. “The airlines are trying to make up for the losses of two years of the corona pandemic,” said Milo Bogaerts, Allianz Trade boss for German-speaking countries. An average price increase of 21 percent compared to the previous year is expected for the year as a whole.
Together with the higher passenger volume, the companies’ sales should more than double compared to the previous year, which was characterized by corona, but are nowhere near enough to offset the losses since 2020. Most companies are not expected to return to profitability until 2023.
In contrast to consumption-dependent kerosene costs, company personnel costs are fixed. In view of the fuel prices, the airlines currently have little incentive to increase their staff, which was severely reduced during the crisis. The consequences for Allianz Trade are obvious: “Flight cancellations are increasing and spoiling the holiday joy of travelers for a little longer.”
In the medium term, the industry will face more competition from the more environmentally friendly railways for European connections, the authors expect. While the development of CO2-neutral aircraft engines will take a long time, the heavily indebted airlines also lack the money to buy new, more economical machines in the meantime. The political requirement to increasingly mix in sustainable fuels will continue to drive up fuel costs and squeeze profit margins.
