ING: Flying to Get Costlier but People Still Eager to Travel

Staff, parts and plane shortages are set to drive global air fares higher as demand for travel continues to grow, found a report released this week by ING.

According to the findings, ticket prices will continue to rise worldwide. Indicative of the situation, the report notes, some airlines, including Lufthansa and KLM, revised available seat capacity downward for 2024.

According to the International Air Transport Association (IATA), however, increasing demand is pushing capacity up.

The ING report attributes the continuing price hikes to delays in orders at Airbus and Boeing as well as growing demand for second-hand planes, which it said is also driving up leasing rates.

At the same time, staff shortages across the supply chain are impacting services.

“The global airline fleet hasn’t managed to keep up with demand and that’s not over yet,” said report writer ING Senior Sector Economist Rico Luman.

“Against the backdrop of capacity constraints, pricing power remains with carriers,” said report writer High Yield Credit Strategist Oleksiy Soroka.

In Europe meanwhile, air fares outpaced inflation by 15 percent earlier this year. Despite the increasing prices however, passengers are still willing to pay to travel. According to the European Travel Commission (ETC), which represents Europe’s national tourism organizations, Europeans are eager to travel this summer despite the geopolitical tensions and increasing costs.

Indicatively, 75 percent of Europeans plan to travel between May and October this year marking a 3 percent rise compared to last year with 37 percent of those polled planning a single trip and 57 percent two or more.  Traveler spending in Europe is also set to increase by 14.3 percent this year over 2023, the ETC said.