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Air fares to spike short-term from capacity constraints: IATA boss
October 6th 2021
Air fares will rise because airlines will not have enough aircraft to cope with a surge in demand after passengers return to travelling again, International Air Transport Association (IATA) boss, Willie Walsh, predicts. Read More » Speaking at the closing press conference at IATA’s annual meeting in Boston, Walsh said people were keen to travel as COVID-19 restrictions were lifted and airlines had no need to encourage them to fly. “It’s a very different sort of crisis we face today,” Walsh said. “(It’s) different to what we witnessed post-9/11, when we genuinely did need to encourage people to get back in the air. Or even during the global financial crisis [of 2008] where price stimulation was a big part of persuading people to fly. This time around people want to fly — they really do — and airlines want to fly them, but the restrictions that are in place are preventing that from happening.” Walsh said pricing in the short-term would be “a supply and demand situation”. He noted Ryanair’s Michael O’Leary forecast fares to increase because the rebound in demand would outstrip the speed at which industry could return capacity. This was due to a number of reasons, Walsh said, including the loss to the industry of skilled people and significant reductions in supply because of decisions to retire aircraft. “It will take time to replace those aircraft,’’ he said. “Airlines will be more cautious about replacing those aircraft. So there is likely to be a short-term disconnect between supply and demand and that will influence the prices more than anything else.” However, Walsh held out longer term hope for travellers by describing aviation as a “brutally competitive industry”.
