In 2019, the average cost of a flight ticket was £383 according to the Office of National Statistics (ONS). In 2022, it was £523 – the highest it has ever been.
That puts airfare increases well ahead of overall inflation; as measured by the Bank of England it was around 22% between 2019 and 2023.
When Which? Travel looked at prices for some popular routes from London early this summer, we found a Christmas trip to the Canaries would cost a couple around £1,000 – just for the flight not including luggage. For the same week of sunshine in Thailand, it was more than £3,000 for two – without luggage.
For more independent travel advice and recommendations,Airfares soar
The ONS tracks prices for domestic, short-haul and long-haul flights, and they’ve all gone up significantly.
The leap from 2019 to 2022 was around a third – much higher than inflation. So far in 2023 the increases are even greater, with fares in the first half of the year up by almost half compared with the same period in 2019.
Airfares by yearData from ONS. Data collection issues during the pandemic mean figures for 2020 and 2021 may be less accurate. Fares are the weighted average for domestic, European and long-haul economy flights combined.
Why airlines say fares are up
Airlines argue that prices have gone up because of external pressures. Jet fuel prices more than doubled in 2022 compared with the year before, up to $135.60 a barrel, although they’ve since come down. Analysts at IATA expect the cost across 2023 to average out at $98.50.
However, airlines typically hedge fuel prices by trying to buy when fuel is cheap so they’re not caught out when prices rise. This means fares don’t automatically follow fuel prices when they go up nor do they follow them when they drop
Carriers have also found it difficult to respond to the huge demand that’s followed the end of the pandemic. Aeroplane manufacturers Airbus and Boeing have had supply chain issues and there's a waiting list for new aircraft.The result is that there’s more demand than there is supply – of both aircraft – and seats for passengers. In short, lots of people want to fly so airlines have taken the opportunity to increase fares.
Are airlines cashing in on passengers?
In the financial reports for BA, easyJet, Jet2, Ryanair and Wizz Air for the year up to March 2023, only Jet2 paid a dividend. It was hard to argue at that point that the airlines were cashing in, but the forecast for 2023 is a different story
The International Air Transport Association (IATA) has forecast that airline profits will hit £8bn for 2023.
Individual airlines have also reported that, while they were still recovering from the pandemic in 2022, in 2023 they’re surging ahead. In April 2023, easyJet predicted that it would make around £260m for the full year. BA owner IAG raised its underlying profits forecast from £1.6bn to £2bn – based on increasing passenger revenue and falling fuel prices. Ryanair made £1.2bn in 2022 and expects that to increase for 2023.
Luggage and seat selection rip-offs
A large part of airline profits comes from what they call ‘ancillary revenue’ – that is everything but the fee you see when you first make a booking.
Choosing to sit next to your travel companions, checking in luggage and bringing a case to put in the overhead locker can add hundreds to the price of a family holiday. That figure has gone up by far more than inflation in recent years.
In 2017, we looked at flights from London to Malaga and the average cost to take a 20kg suitcase with BA, easyJet, Jet2 and Ryanair was £44. Looking at the same destination today it was £80. Inflation over the same period has been 27%, but that’s an increase of 82%.
Taking a cabin bag to put in an overhead locker on one return easyJet flight from Luton to Alicante this summer cost £43. Until 2020, that would have been free. On a Ryanair flight it cost £55, up from around £10 when Ryanair introduced that policy in 2017.
‘Drip pricing’ controversy
The government ordered an investigation earlier this year, with Prime Minister Rishi Sunak saying: ‘There’s just not the kind of price transparency that you’d expect.’
Which? advises passengers to research the full cost of a flight, not just the headline fare before paying. In some instances it may be cheaper to book with airlines such as BA or Jet2, who still include some extras for free.
Supply and demand
Financial TimesHe also said that price rises were happening despite – or because – passengers have less choice than they did before the pandemic. The number of cities connected by air travel in Europe has fallen by 16%, with airlines prioritising the most profitable routes.
It’s clear that the reason for increased prices is increased demand from passengers, with millions taking their first post-pandemic holidays. Whether this is called ‘greedflation’ may be a matter of opinion, but airlines shouldn’t take their customers for granted.
So far, people have prioritised travel plans despite the cost of living crisis, but airfares can’t continue to rise faster than inflation. If the cost of living crisis means fewer passengers next year, prices should fall.
source https://www.which.co.uk/news/article/are-airlines-guilty-of-greedflation-aSJAg3X20CQ6