High flight prices are here to stay in Europe

European airfares were up 36% in the month of May compared to the previous year, while inflation was at 6.1% for the same period

Demand for air travel appears to be defying inflationary pressures, with total passengers up 16.2% year-on-year for May, according to Airports Council International (ACI) - despite flight prices having soared since the pandemic, well beyond the rate of inflation in Europe.

Key takeaways

• “I do think fares need to be permanently higher than they were in 2019,” Alexander Irving, European transport analyst at AB Bernstein;
• “Airlines are going to have to pay for more of their carbon emissions … plus the inflation element,” he said, adding that pilots, cabin crew and ground staff were all demanding higher wages.
• Increasing ticket prices will likely serve low-cost carriers such as Wizz Air and Ryanair well, as customers are still keen to travel but are likely to trade down to more cost-effective services.

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