For more than two years, the main topic of conversation pretty much everywhere has been about the impact of COVID-19. Now that the worst of the pandemic seems to be over and people are traveling more freely again, another hot topic is on everyone’s lips: expensive plane tickets.
People are looking for flights — sometimes their first in years — in a rush of what has been termed “revenge travel.” Internet searches show sky-high airfares for many routes, yet travelers with wanderlust are opting to stomach the higher costs after being grounded for so long.
“The demand is off the charts,” Delta Air Lines chief executive officer Ed Bastian told an industry conference last week, saying that fares this summer might be 30 percent higher than before the pandemic.
“It’s coming with leisure, it’s coming with premium customers, it’s coming with business, it’s coming with international — it doesn’t matter what the category is,” Bastian said.
The trend is across geographies, although some places are more squeezed than others. Searches for a return economy-class ticket between Hong Kong and London on Cathay Pacific Airways late this month turn up prices as high as HK$42,051 (US$5,360), which is more than five times the typical cost before the pandemic. Direct flights between New York and London around the same time cost more than US$2,000 in economy.
“Ticket prices are really expensive these days,” said Jacqueline Khoo, who works in tourism.
Her company paid S$5,000 (US$3,628) for a colleague’s return trip on Singapore Airlines to Hamburg later this month.
“It’s really amazing that an economy seat ticket would cost you so much,” she said, adding that the flight used to cost about S$2,000.
A Mastercard Economics Institute study found that the cost of flying from Singapore was on average 27 percent higher in April than in 2019, while flights from Australia were 20 percent more.
Increasingly, travelers are booking tickets months in advance as they are worried about the cost of buying at the last minute, said David Mann, chief economist for Asia Pacific, Middle East and Africa at the institute.
There are several reasons for the higher fares, not all of which are within the control of airlines.
GIANT JETS IDLE
Carriers are cautious about bringing back all their idled jets, even though most countries have eased cross-border restrictions. That is particularly true for giant aircraft, such as Airbus’ A380 superjumbos and Boeing’s older 747-8s, as airlines turn to more fuel-efficient models, such as the A350s and 787 Dreamliners. The pinch is most acute in Asia, which was the slowest to ease restrictions, and as China, the biggest market in the region, essentially remains closed.
After navigating varied and changing government policies over the past two years, airlines need time to rebuild fleets, given that many restrictions only eased last month, Association of Asia Pacific Airlines director-general Subhas Menon said.
“It’s still early days,” he said. “We’re just in June, so it’s not like turning on the tap.”
Carriers also scaled down their networks during COVID-19, none more so than Cathay, which has been hemmed in by Hong Kong’s onerous travel and quarantine rules. That has left people considering lengthy journeys with one or more stopovers, whereas before they might have flown direct. British Airways does not even fly to Hong Kong at the moment.
With fewer planes in the skies, there are fewer seats to meet the recovery in demand, which in turn has pushed up fares.
HIGH FUEL COSTS
Russia’s invasion of Ukraine has exacerbated a steady rise in crude oil prices over the past 18 months. Jet fuel now represents as much as 38 percent of an average airline’s costs, up from 27 percent in the years leading to 2019. For some budget airlines, it can be as high as 50 percent.
Spot jet fuel prices in New York have soared more than 80 percent this year, although prices vary from region to region depending on refining costs and local taxes. Many US carriers have so far been able to cover the increased fuel costs — but only by passing them along to travelers in the form of higher fees.
Some investors believe airlines might seek to boost fuel surcharges as a way to cope, Citigroup analysts said in March.
Most of Asia’s airlines do not hedge jet fuel, which means they are more vulnerable to price increases.
RICH TRAVELERS
Higher ticket costs do not seem to be dissuading people from making trips now that many travel restrictions have eased.
Some consumers are tapping dormant holiday budgets and upgrading to more expensive aircraft cabins for leisure trips, International Air Transport Association director-general Willie Walsh said last month.
The so-called “revenge traveler” is “an individual that has been emotionally affected by the lockdowns and has craved travel over the last two years — and they’ve dreamt about it,” said Hermione Joye, sector lead for travel in the Asia-Pacific region at Alphabet’s Google. “They are very spontaneous.”
STAFF SHORTAGE
Hundreds of thousands of pilots, flight attendants, ground handlers and other aviation workers lost their jobs over the past couple of years. With travel picking up, the industry finds itself unable to hire fast enough to allow for seamless operations at pre-pandemic levels.
Singapore Changi Airport — regularly voted the world’s best — is looking to recruit more than 6,600 people. Many workers who were let go have found other, less volatile careers, and are not willing to come back to a cyclical industry. One operator at Changi is offering a joining bonus of S$25,000 to auxiliary police officers, a job that pays a maximum of S$3,700 a month.
In the US, smaller regional airlines cannot fly at full capacity because bigger carriers have hired away too many pilots. Hundreds of flights have been canceled in the UK, ruining holiday plans, and leading to long delays and scenes of passengers sleeping at airports. In Europe, major airports have faced delays and cancelations after failing to hire adequate staff. That has disrupted airline schedules and added to costs.
LOW ON CASH
Aviation is a capital-intensive industry with historically wafer-thin margins. The pandemic has made that operating climate even more challenging: Globally, airlines lost more than US$200 billion since the emergence of COVID-19.
Elevated fares provide carriers with a path to recover from losses and return to the black.
“We’ve never seen a revenue environment like this, led by domestic leisure,” American Airlines Group chief executive officer Robert Isom told an industry conference last week. “On top of that, we see large corporates coming back in. Small and medium-sized businesses have been really off the charts for a number of months now.”
It is unclear how long these high prices will persist, even as many travelers seem willing to pay up.
“The rise in prices is a short-term phenomenon,” said Stephen Tracy, chief operating officer at Milieu Insight, a Singapore-based consumer insight and analytics firm.
“Let’s all just hope that once these things equalize again, the prices come back down,” Tracy added. “I am fairly confident that they will.”
In a few cases, fares are actually lower than pre-pandemic levels, Ryanair Holdings chief executive officer Michael O’Leary said.
While there is the prospect of more fares returning to the levels they were at before the pandemic, the war in Ukraine and COVID-19 outbreaks are still risks, he said.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations