Sitting in a plane has become more expensive when compared to pre-Covid prices. Whilst that is the situation for aviation generally, it has been more acute recently with flights within, and to and from, Asia.
According to data from Skyscanner Travel Insight, airfares within the Asia Pacific region were 33% higher in February 2022 compared to the same month in 2019. In some cases, customers are paying twice what they did four years ago, and the problem is not expected to end anytime soon.
The average price for a business class seat from Singapore to Shanghai is double the 2019 levels, and economy fares from North America and Europe to Asia are set to rise by 9.5% and 9.8% respectively in 2022. The biggest constraints on the industry are soaring costs, labour shortages and the closure of Russian airspace, the latter which is forcing many flights to reroute, making trips longer and more expensive.
While the pandemic has seen airlines and travel providers struggling to stay afloat, the return of travel in 2022 is now resulting in increased demand for flights. However, the aviation industry is not recovering uniformly, and some regions are experiencing more significant price jumps than others.
For example, unlike North America and Europe, which relaxed border restrictions earlier, most Asian destinations have only reopened for travel in 2022, initially led by Thailand and its pilot ‘Phuket Sandbox’ which was launched in July 2021.
This means that the difference in fares in Asia-Pacific countries is currently the highest around the world, especially flight out of Australia into Asian destinations. Even when demand is there, it’s not easy for airlines to immediately add service, as they often require long lead times to position crew and ground staff, coordinate with airports, and relocate aircraft.
Despite China’s reopening, outbound flight capacity is currently only at 15% to 20% of pre-Covid levels, according to Trip.com CEO Jane Sun. She said that the bottleneck was largely limiting the overall recovery pace of China’s outbound travel. Meanwhile, flight capacity for long-haul international routes, such as those between Europe and Asia, is only at 17% of 2019 levels this quarter, according to American Express Global Business Travel.
Even though airline capacity is coming back, it’s not coming back at the same pace as the pent-up demand, which is the crux of the issue. Reduced capacity, and growing demand, is the formula for rising prices.
The closure of Russian airspace to airlines from dozens of countries as its invasion of Ukraine started last year is also impacting prices. Many flights have been forced to reroute, making trips longer and more expensive. For example, a flight from Tokyo to London that now has to head east over the North Pacific, Alaska, Canada, and Greenland has to add 2.4 hours of flight time and is likely to burn around 5,600 gallons more fuel, a 20% increase.
The cost of fuel itself has skyrocketed too. QANTAS CEO Alan Joyce says that airfares will have to be higher than they were before Covid, because fuel is higher. Joyce also said that the carrier was incurring higher expenses and needed time to retrain crew who had been out of commission during the pandemic.
Despite the significant increase in prices, experts do not believe that people will be deterred from taking trips or that the overall recovery of the sector will be damaged.
Hugh Aitken, Vice President of Flights at Skyscanner says they are seeing sustained strong demand across Skyscanner platforms for travel in 2023,
“But we are not seeing any signs of impact on consumer confidence and traveller demand.
Trip.com’s Sun says she anticipates the recovery in outbound Chinese travel to pick up the pace in the coming quarters as airlines continued to restore service. Some airlines have also adapted to the outcry over prices by offering catchy discounts.
QANTAS and its budget carrier, Jetstar, have announced discounts on over a million seats this year on a mix of domestic and international routes.
