Air Fare Hikes Create Controversy Between Airports and Airlines

Photo source: IATA

The cost of air fares in relation to inflation has led to a disagreement between Europe’s Airports and airlines. The controversy comes after the International Air Transport Association (IATA) released data showing that “airlines were keeping ticket prices below inflation at 16% above pre-Covid 2019 fares” and that travelers in Europe were benefiting.

However, ACI Europe rebutted IATA’s claims saying these were “misleading” and that air fares in Europe increased by +16% as of June this year compared to 2019. ACI Europe presented independent data from RDC1 which places the air fare increase at 38% over the peak summer months (Q3), almost two times the increase in the average consumer prices index.

ACI Europe said October confirmed the trend with air fares increasing further at 47% when booked three months ahead of travel.

ACI Europe Director General Olivier Jankovec.

“Confronted with inaccurate and misleading data, it is crucial to set the record straight about how air fares and airport charges have actually evolved,” said ACI Europe Director General Olivier Jankovec. “Not only have airlines been able to reflect inflationary pressures in what they charge consumers, but they have been able to exert significant pricing power thanks to supply pressures and capacity discipline,” he said.

Jankovec added that many airports have yet to fully reflect inflationary pressures in their user charges.

IATA Director General Willie Walsh said “European air travel is continuing to recover strongly and is on track to exceed the 2019 benchmark in 2024. The competitiveness of Europe’s air transport market is holding air fare inflation at 16% – four percentage points below the rises that we have seen in the broad consumer price index. Considering the extreme volatility of jet fuel prices and increases in workforce salaries this is a significant achievement and stands in contrast to the continually increasing charges being pushed by our infrastructure suppliers.”

IATA Director General Willie Walsh. Photo source: IATA

According to Walsh, traffic figures show that European carriers sit just 3.6% down on the 2019 peak.

Referring to recovery trends presented by IATA, Jankovec said that in reality air connectivity has recovered at a slower pace than passenger volumes. “As of June, air connectivity from European airports remained 17% below pre-pandemic levels, while passenger traffic was down by 5.9%.

Jankovec went on to add that in addition to paying inflated air fares, consumers had fewer options to choose from.

“The market has structurally changed through the pandemic and the recovery, and it is crucial that policy makers and regulators now see though these changes and what lies ahead,” he said adding that the time had come for economic regulators to step back, “as the dominance of airlines today makes intrusive price regulation of airports obsolete. This is also where the 30-year-old EU regulation on airport slots requires urgent review.”