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Cheap Flights Will not Return, According to Airlines Executives

With demand for travel at an all-time high and supply unable to keep up, prices have skyrocketed, generating enormous profits for airlines, and it does not seem like that will change.

Since there is a huge demand for travel and a finite supply of tickets, airline executives have said that low-cost flights are now a thing of the past.

Their defense is that rising fuel and labor expenses, coupled with scheduling delays and a shortage of workers, prevent airlines from adding more flights to their schedule.

The consumer price index for airfare in September was 43 percent higher than it was in the same month last year, according to the U.S. Labor Department. Although the CPI for September 2019 grew by 8%, ticket costs last year remained low, according to industry association Airlines for America.

Airlines have finally been able to stabilize their operations after a challenging start to the summer marked by cancellations, lost baggage, and delays. They have done so despite facing a severe scarcity of regularly scheduled flights; industry executives now predict that expansion will be constrained for the foreseeable future.

According to Southwest Airlines Co. Chief Operating Officer Andrew Watterson, "It’s unusual. You have demand quickly outstripping supply like this."

Demand and supply "may not be as aligned as it was pre-pandemic," he continued, for a couple of years.

This is a favorable turn of events for airlines because the higher tickets assist to offset an increase in fuel prices and revenues of almost 80%. Although those costs have changed recently, industry insiders do not foresee significant reductions in fares very soon.

A round-trip ticket for domestic travel in March 2023, for instance, costs on average $350. That is a 26% increase from this time last year and a 28% increase from 2019. However, if further reservations are not made, some adjustments may still occur, according to the booking app Hopper.

Europe, where costs are also rising, does not appear to be any different from the United States. For instance, Ryanair, the largest airline in Europe based on passenger volume, announced a 14% increase in ticket costs over the summer compared to 2019.

According to Ryanair Chief Financial Officer Neil Sorahan, "There has been a structural change in capacity in Europe over the last two years. The days of the kind of 9.99 euro ($9.98) fares are probably gone."

However, the increased costs have not yet had a significant impact on consumer demand for travel. Nevertheless, given rising prices for products like food, electricity, and bills in the future, it might. This is especially true considering that such expenses would eat up a sizable portion of most people's money. People would become cash-strapped if they used their savings for travel, according to Kevin Healy, president and chief executive of consultancy company Campbell-Hill Aviation Group.

"The only thing pushing in the other direction is inflation," he said. "That hasn’t seemed to have as big an impact yet."



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