Asia-Pacific & Middle East Council Addresses Record-Breaking Airfare Hikes In Monumental Cambodia Gathering

Tuesday, November 5, 2024

Love

Airfare hikes took center stage at the recent Airports Council Asia-Pacific & Middle East meeting in Cambodia, revealing significant trends across key markets.

In a recent Board Meeting held in Phnom Penh, the Airports Council International Asia-Pacific & Middle East, hosted by Cambodia Airports, focused heavily on the ongoing trend of rising airfares.

The ACI APAC & MID partnered with Flare Aviation Consulting to conduct an in-depth airfare analysis covering approximately 60,000 routes across 19 countries from 2019 to 2024. This study provided essential insights into the air travel recovery trajectory in the region post-pandemic.

While international air travel is making a strong comeback with seat capacity projected to exceed pre-pandemic levels by year-end, ticket prices remain over 10% higher in multiple markets.

Rising Domestic Airfares in Key Markets
Significant fare increases were observed in domestic travel across the region during the first half of 2024 compared to 2019. Notable fare hikes were recorded in major domestic markets reliant on local air travel, including India (+43%), Vietnam (+63%), Malaysia (+36%), Thailand (+26%), and Australia (+21%).

Despite the anticipated return of international seat availability, ticket prices in these countries remain elevated. In particular, international airfares have seen increases of 16% in India and Vietnam, 21% in Malaysia, 14% in Australia, and 7% in Thailand, primarily due to the influence of low-cost carriers (LCCs).

The report emphasized the resilience of LCCs in the Asia-Pacific, which have not only recovered from the COVID-19 impact but also expanded their market share, further shaping airfare trends.

Middle East Analysis
In the Middle East, many nations surpassed pre-pandemic traffic levels by the second quarter of 2024. Countries like Bahrain (+24%), Qatar (+27%), Saudi Arabia (+30%), and the UAE (+39%) saw substantial growth in air travel. However, international ticket prices in certain areas remain high, with the UAE seeing a 22% increase and Oman a 10% rise in fares.

Commenting on the study, Mr. Emmanuel Menanteau, President of ACI Asia-Pacific & Middle East and Regional Director, VINCI Airports, said: “Affordable airfares is crucial not only for ensuring accessibility to air travel but also for supporting the economic vitality of our communities. Excessive fare increases can discourage passengers, hinder connectivity, and ultimately impact the growth of our sector. It is critical to keep air travel within reach for all, allowing our airports and local economies to thrive together.”

Mr. Stefano Baronci, Director General, ACI Asia-Pacific & Middle East, said: “While passenger numbers in Asia-Pacific are returning to pre-pandemic levels this year, many travelers are paying significantly more, especially on domestic routes. This indicates that the demand for air travel is likely higher than in 2019. We must ensure that rising airfares do not become a barrier for potential customers. Passengers deserve transparency about these costs. Airfares result from a complex pricing system set by airlines, influenced by demand and supply, price elasticity, competition on any given route. For example, routes that are reliant on a single airline saw fare increases of over 25%, while those with steady competition experienced only about a 10% rise.”

“It is important to note that the increase in airfares is not related to airport charges. Considering the airlines’ cost structure, fuel prices and inflation have a much greater impact than airport charges. For a long time, airport charges have represented a stable component of airlines’ operating costs, averaging around 4%. From 2019 to 2024, airport charges have decreased by 7% for domestic flights and increased by only 6% for international flights, making their influence on the recent spike in airfares in the region negligible,” Mr. Baronci added.