The initial situation in the airline market
According to a study by the credit insurer Allianz Trade, scarce capacities combined with high demand for air travel will continue to ensure high ticket prices. Air fares on international routes, for example between the USA and Europe, have risen by 23 per cent on average over the year.
Although aircraft deliveries, which plummeted by half during the 2020 Corona crisis, have increased again. But aircraft manufacturers continue to struggle to keep up with demand, the study says.
According to the report, aircraft deliveries worldwide rose by 19.1 per cent last year compared to the previous year and growth of 19.8 per cent is also expected for 2023. “But the current six-month delay does not seem to match the optimistic plans of aircraft manufacturers,” says Allianz Trade’s assessment. This supply shortage could lead to air fares remaining high.
At the same time, demand is growing strongly. According to the study, global revenue passenger kilometres in the first quarter of 2023 increased by 58.3 per cent year-on-year and reached 85.9 per cent of the pre-pandemic level. The increase was particularly strong in Asia at 125.5 per cent, but Europe also saw significant growth at 44.3 per cent. Sales of airline tickets for the current summer (May to September) have increased by 35.2 per cent worldwide so far, according to Allianz Trade, and have reached 92 per cent of pre-crisis levels.
The consequences for the airlines
Due to the more expensive airline tickets and simultaneously falling paraffin prices, the airlines’ margins are also increasing, so that the airlines should write profits again, the study authors believe. According to forecasts by the airline association IATA, total revenues are expected to grow by 9.7 per cent year-on-year to 803 billion US dollars, and net profits could reach 9.8 billion dollars.
“After three loss-making years, the airline industry could return to profitability in 2023 – that is earlier than expected,” Milo Bogaerts, Head of Allianz Trade in Germany, Austria and Switzerland, summarises the study results. “However, the lack of capacity remains the bottleneck. This is likely to slow down the airlines’ flight of fancy for the time being. For consumers, this also means that flying will remain expensive.
Conclusion for holidaymakers
For us as holidaymakers, this means that waiting for “last minute” will only lead to great disappointment. The old saying: “The early bird catches the worm” applies again.
So it’s best to plan and book your holiday early.