💬 'The era of “cheap, promotional… €0.99 fares” is over' The Ukraine war has had an impact on fuel prices and inflation will continue to dampen consumer demand, analysts warn – but travel will continue its recovery
Airlines – which took on significant debt during the pandemic, more than $650bn according to IATA estimates – are now less inclined to absorb rising operating costs. As a result, fares – which generally fell in the 2010s amid a highly competitive and robust market – have risen sharply since 2020.
Oxford Economics forecasts that while they are likely to fall back a little next year, the recent trend of ticket price stimulus is not expected to return. Average flight costs are likely to remain markedly higher than in the previous decade, until at least 2030. However, the global tourism rebound has been stronger than expected this year, with sun and beach tourism proving to be the most resilient form and, recovery is expected to continue, albeit at a slower pace. Short-haul travel will continue to be favoured, with Oxford Economics forecasting that it will reach 2019 levels in 2024.
Economic activity has slowed as inflation erodes income, but analysis by travel data analytics provider ForwardKeys into the effect on flight ticket purchases this summer has shown that airport chaos had a more detrimental impact. However, looking at other markets such as India, demand for travel to the US has decreased significantly this year as air fares have risen. ForwardKeys has seen the recovery of the UK outbound market stagnate since the summer and cautions that “this trend could potentially worsen as inflation remains high.”
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