Air passengers in the Asia Pacific and Middle Eastern nations paid 53 percent more in nominal terms for their tickets in 2022 than what they paid three years ago in 2019.
While airlines cashed in on rising air travel demand, airport operators are not following suit, according to the latest report by Airports Council International Asia-Pacific.
The report said the rise in airfares is in sharp contrast to the financial health of airports, which are still losing money, with regional EBITDA and net profit margins being negative for the tenth consecutive quarter since 2020.
"Increase in airfares reveals a fundamental imbalance in the financial stability of the industry as well as pose a threat to the sector's full recovery in 2023," the report cautions.
What's the reason behind such a steep surge in airfares?
The most obvious and much-discussed culprit is higher jet fuel costs. ACI Asia-Pacific said jet fuel was 79 percent higher in 2022 as compared to what it cost in 2019 due to supply restrictions.
Besides this, airlines are also looking to recover losses incurred during the pandemic. Increased debt and interest rates coupled with varying operating costs, reduced seat capacity relative to demand, and less competition on some routes are some other reasons driving airlines to increase ticket prices.
What's worrying airport operators?
ACI Asia-Pacific said airports need to get back to pre-pandemic traffic volumes in order to restore their economic equilibrium after a prolonged period of operating in the red.
"Such elevated airfares represent a downside factor for full recovery as these may suppress demand and therefore reduce the number of passengers," the report states.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Supreme Court says it may consider interim bail for Arvind Kejriwal due to ongoing Lok Sabha polls
May 3, 2024 4:57 PM
10% discount on fare on Mumbai Metro lines 2 and 7A on May 20
May 3, 2024 2:40 PM