Airline ticket prices are exploding but companies are stocking up for the summer

Ticket prices have jumped, inflation is eating away at purchasing power, but airlines serving Europe say they are filling up with summer bookings, letting the pandemic fade into the rearview mirror a little more. Some companies have not yet reconstituted their capacities, reduced during the health crisis, while Airbus and Boeing are struggling to deliver new aircraft on time, which does not prevent customers from returning in even greater numbers than in 2022. .

The law of supply and demand is doing its job and, in France, ticket prices jumped 23.6% over one year in the first quarter of 2023, according to statistics from the Ministry of Ecological Transition. The explosion in the cost of hydrocarbons following the invasion of Ukraine by Russia underlies a large part of the phenomenon, since kerosene represents approximately 30% of carriers' costs. “Because of oil going up 71% year over year, our average fare went up 31%,” said Easyjet CEO Johan Lundgren.

But other factors come into play, such as "a very sharp increase in maintenance costs" linked to the scarcity of certain metals and disrupted supply chains, according to Marc Rochet, head of the French companies Air Caraïbes and French Bee. He also mentions the repercussions of wage increases granted in the sector. However, "we do not see a weakening of demand", testifies Johan Lundgren, even if he concedes that customers "are looking for the best value for money".

Same feeling from Nicolas Henin, deputy general manager of Transavia France, in charge of sales and marketing: he hears “a lot of feedback” from customers noticing the relative high cost of tickets. But "for the moment, we have not seen any impact on demand" even if "it is something that we look at like milk on the fire". For him, “people sanctuary this budget and continue to want to travel”. "Since the pandemic, people have prioritized travel even more," said Johan Lundgren of Easyjet.

Transavia's planes this summer for Greece, one of its star destinations, were 60% full by mid-April. With new destinations (Dakar, Yerevan, Paphos, etc.) and a fleet increased to 71 aircraft, the Air France-KLM group's low-cost airline has seen its capacity increase by 65% ​​over four years. Other destinations experiencing a "very significant rebound", those of the Maghreb: "people have not been able to return to the country to see their families for a while", according to Nicolas Henin. Airport slot restrictions in Algeria have only recently been lifted.

After having tended to book very late during the pandemic, when uncertainty reigned over border closures, travelers, “more selective on prices”, are also gradually returning to their old behavior, for example taking their tickets five months in advance for long-haul flights, according to Marc Rochet. So much good news for an aviation sector which, after having gone through the nightmare of Covid-19, “is in very good shape, in full rebound”, according to Pascal Fabre, specialist in this field at AlixPartners.

In this context of rising prices, the companies "for many achieved higher turnover in 2022 than they were before the crisis, although the capacity remains below", he noted during the meeting. a recent press luncheon. These carriers “have generated cash and started to deleverage”. This is the case of Air France-KLM, which announced on Wednesday evening that it had “fully reimbursed” the aid granted by the French State to enable it to survive the health crisis.

A caveat to this optimism: the leaders of the aviation sector, chafed by the saturation of airports last summer due to a lack of staff, are now talking about the risk of a return to saturation of European skies during the high season, a potential chaos whose they had a taste in March because of the strike of French air traffic controllers.