U.S. and European airlines will try to boost profits this year by raising ticket prices as they try to make the most of the post-Covid travel boom and counter high costs caused by a shortage of planes, Reuters reported, citing Agerpres.

Major airlines are scrambling to add more flights to meet demand, but are struggling due to delays in deliveries of new planes from major manufacturers Airbus and Boeing, as well as the grounding of planes that use engines like the RTX, which can have some drawbacks.

Limited supplies of new aircraft keep ticket prices high, allowing airlines to pass on higher costs for fuel, labor and maintenance. Average revenue per passenger, or yield, rose to 6.2 percent last year, the fourth year in a row, according to data from the International Air Transport Association (IATA).

Yields will continue to grow in 2024, albeit at a slower pace of around 1.8%, IATA predicts. In the summer, the busiest period of the year, European airline profitability is expected to surpass last year’s figures, reaching a high of 8.5%, and is expected to rise further in 2025 as demand for travel continues and new aircraft deliveries remain delayed. , according to Bernstein analysts.

According to them, this summer demand will increase by 15-20% compared to 2019, and the capacity is almost not moving.

Analysts say airlines are making more money because customers are willing to pay

“Higher rates this summer will boost profits. Airlines will make more money because customers are still willing to pay more,” says Jamie Lindsay, an investor at Artemis Investment.

Reuters interviews with several analysts, executives and investors, as well as data analysis, show airlines’ resilience as they recover from a pandemic that has seen planes grounded, borders closed and billions of euros in debt taken on to stay afloat.

In addition, the analysis shows the importance consumers place on travel and experiences after months of pandemic restrictions, a phenomenon known as “revenge travel.”

An example is Wizz Air, a company whose earnings this summer are expected to register similar growth to 2023, even if there is no change in capacity, says UK director Marion Geoffroy.

“If capacity is limited, then pricing increases,” Marion Geoffroy said, without specifying the scale of the increase.

Some tour operators fear that “revenge trips” are over, despite record demand

Data from the Airlines Reporting Corp (ARC) showed that the number of flights sold by US travel agencies in January hit an all-time high for the month, while the average ticket price rose 3% year-on-year. This is in conditions where, starting from 2019 and until now, the cost of air travel in North America has increased by 30%, and in Europe – by 25%, ForwardKeys reports.

So far, the price increase has not affected demand. United Airlines says bookings and profitability on transatlantic routes will remain stable this year.

In addition, travel to China, one of the last markets to lift restrictions, also rebounded, with tourism receipts surpassing pre-pandemic levels during the Lunar New Year holiday. As long as the economic outlook remains stable, consumers may continue to tolerate higher prices, investors and analysts say.

But some fear that trend could fizzle out, especially given the recent recessions in Japan, Britain and Germany. Hotel chains Hilton Worldwide and Marriott International, as well as online travel agency Expedia, have already signaled that the phenomenon of “revenge trips” is over.

“If we see continued deterioration in the labor market, that could start to affect demand,” said Madeleine Rohner, portfolio manager at DWS Smart Industrial Technologies, which invests in Lufthansa and TUI.