Look carefully at what antipyretic offers are on the market on a smartphone and press the button to turn off the flight. This was a common practice among many consumers who didn’t have many resources until now. However, like so many other things in these times of inflation, the picture has changed. The rise in costs, especially fuel, which accounts for 30% of the expenses for an airline, after a war in Ukraine, the results of which are seen from afar, is driving airlines away from the old and attractive, more attractive commercial policy at a higher rate.
In this case, Ryanair’s chief executive Michael O’Leary said a week ago that “we would not see a rate of more than 9.99 euros”. The fact is that this increase in expenses, among other factors, is starting to be reflected in the prices that airlines set for their flights, and will have to be seen in the future.
“If you look at the average prices of companies, there are no longer under 50 or 60 euros.” This is how Javier Gándara, president of the Airline Association (ALA) and EasyJet’s Southern Europe director, believes that companies in the industry “will maintain lower prices for some seats depending on the type of company” sums it up. . In the case of Ryanair, for example, a bid launched in mid-August set a price of 19.99 euros for only 45,000 seats; these rates, though low, are twice as expensive as ultra-cheap. Not in vain, says Gándara, they will continue to serve as a promotion to “spur” demand, but “it’s impossible for a company to survive at these prices alone in their rates”. Therefore, the regular ticket will be very different. But how will it be fixed?
Multivariate rates
As sources from Valencia airline Air Nostrum explain, “setting ticket prices in the industry is a combination of many variables.” It varies depending on the route, the season, and even the day. However, today it is marked by instability and a continued rise in costs after a 2021, when airlines lowered prices to attract passengers after paralysis due to covid.
With all these factors, and according to a study by fintech firm Wise that analyzed 130,000 tickets purchased at 17 airlines, traditional European companies’ rates have already increased by 30 percent and in Europe by 50 percent. lower costs. According to these data, Air France, Iberia, Ryanair or Vueling are some of the airlines where the inter-year variation of the minimum purchase price has increased by more than 43% compared to last year.
However, the outlook for prices today is uncertain. “In the short and medium term, the average rate will depend on how the balance of supply and demand evolves from route to route, flight to flight,” Gándara summarizes.
Because, as Air Nostrum adds, in a “competitive” industry like the air sector, “excessive price increases have immediate repercussions on potential demand and competition that wants to “take your place”. “It’s not easy to transfer cost increases directly to prices”. They confirm that at a time like the present, rates will have to “soften as much as possible the impact we incur on certain costs.”
The most important of these, fuel, threatens to have a greater impact as the end of the war is not near. Likewise, Gándara emphasizes that the “fuel hedging at a certain price” that companies take on during more favorable months has either ceased or directly ended.
And not only that. Because, as she recalls, it adds a context for a secondary expense such as a flight that “contains many elements, such as inflation or recent mortgage increases, that go against the consumer’s income.” That’s why the head of the ALA believes that the economic margins should be narrowed, as eventually “when flight started after the pandemic.
Source: Informacion
Christina Moncayo is a contributing writer for “Social Bites”. Her focus is on the gaming industry and she provides in-depth coverage of the latest news and trends in the world of gaming.