Holidaymakers face high fares again this summer as demand for flying grows and aircraft manufacturers push to meet a shortfall in supply left by pandemic restrictions, according to leading Irish aviation financier Avolon.
The Dublin-based company, one of the world’s leading aircraft lessors, calculates in its 2024 outlook that some 4.7 billion passenger journeys would be undertaken on airlines this year.
While that total includes multiple journeys by passengers, Avolon’s head of risk Jim Morrison noted that “more people will fly this year than any year before”.
However, the company noted that Covid restrictions prevented manufacturers, mainly Airbus and Boeing, from building 3,400 aircraft, 12 per cent of the world’s fleet, squeezing the number of available aircraft.
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“With continued supply constraints, air fares may well stay elevated,” Mr Morrison said.
Ticket prices began rising sharply last year, with some estimates claiming they were up to 30 per cent higher than in 2021, when travel restrictions continued to depress demand.
However, the International Air Transport Association said in November that at the start of June, European air fares were up 16 per cent on pre-pandemic levels, below an overall inflation rate of 20 per cent. The association forecast that the average global return flight would cost $283 (€261) this year, as against $315 in 2019.
Passengers remain willing to pay more for their flights and there are no signs of a slowdown in travel, Avolon said.
Andy Cronin, Avolon’s chief executive, argues that higher air fares do not translate into an automatic boost to profits for either airlines or his industry, which leases jets to commercial carriers.
He noted that higher prices also reflect the “increased cost of doing business”, including passengers’ demand for more environmentally friendly flying. That is pushing up costs such as sustainable aircraft fuel, seen as key to aiding airlines in cutting their greenhouse gas emissions.
Avolon expects manufacturers to deliver $100 billion worth of new aircraft to airlines around the world this year, according to its outlook, called New Horizons.
Aircraft lessors, including the Irish company, will provide about $50 billion of that. Avolon and others in its industry buy aircraft from the manufacturers, using their own cash and borrowings. They then lease them to airlines, earning revenues from the rent paid.
Despite the impact of Covid shutdowns and issues at Boeing, Avolon notes that manufacturers are continuing to increase production.
They delivered more than 1,200 new large commercial aircraft last year, up 13 per cent from 2022, while that total should reach 1,450 in 2024, Avolon predicted.
