IATA Chief Expects Airplane Ticket Prices to Increase
Soaring fuel costs, sustainability requirements and poor financial condition of airline companies may inevitably lead to higher ticket fares, said International Air Transport Association (IATA) Director General Willie Walsh this week.
On the sidelines of IATA’s recent World Financial Symposium, Walsh and Qatar Airways Group CEO Akbar Al Baker discussed with CNBC imminent ticket price hikes which they also attributed to fears of a further escalation in the Russia-Ukraine war. News of partial military mobilization on the part of Russia sent oil prices up by more than 2 percent this week.
Walsh underlined that though tickets cost more, airline companies are not necessarily making a profit. Indicatively, airline fares in the US this year increased by 25 percent, recording the largest year-on-year surge since 1989.
Speaking to CNBC, Al Baker said the biggest challenge was to find ways to avoid passing on increases to customers.
“It also worries me… the [instability] of the oil price, which I don’t want to pass to the passengers, which will then discourage them from traveling,” he said.
Walsh and Al Baker went on to add that it was vital companies invested in new aircraft and innovative technologies as well as in sustainable fuels as long as these were however reasonably priced.
“Sustainable aviation fuels do represent the best option that the industry has to achieve our target of net zero by 2050,” said Walsh.
Other challenges ahead include political upheaval, a lack of manpower, and infrastructure inadequacies.
Walsh stressed that airlines won’t be able to finance sustainable solutions if regulations are not revised. “The right policy framework is absolutely critical to sustainability,” he said. “Politicians like taxation, but all the evidence says taxation does nothing for the environment.”
Speaking during IATA’s World Financial Symposium, Al Baker echoed Walsh’s concerns that tourism and air travel demand could be affected by poor regulations or crises. “We are in dangerous times,” he said. “And we just don’t know how things will develop.”