Airlines in the U.S. and Europe are combating higher costs and a customer demand for flights with higher ticket prices, according to industry investors and experts. The operational challenges and increased costs have also been exacerbated by groundings of certain RTX engines for potential problems and delays in new plane production by Airbus.
The average revenue per passenger, also known as yields, now rests at 6.2%, the fourth consecutive year of growth, shows data from IATA, a global trade body. Yields are expected to grow higher this year by approximately 1.8%, a slow pace than seen in recent years.
“Higher fares this summer will keep driving profits. Airlines will make more money because customers are still willing to pay more,” said Jamie Lindsay, an airline investor at Artemis Investment.
Fares to North America have risen 30% since 2019, says travel data firm ForwardKeys, with fares to Europe increasing 25% in the same time period. However, higher fares haven’t seem to affect demand for flights, particularly in a post-pandemic environment that has seen people return to the skies with a vengeance.
