Mabrian has analyzed in a new study the global evolution of average flight prices in the last two years. The results take into account the average monthly prices of flights from July 1, 2021, where there were still post-pandemic restrictions, until June 1, 2023. The study looks at flights from up to 157 countries, inbound direct flights tickets to international destinations, and one way only tickets with taxes and fees included.
The main conclusion of the study is that flight prices have increased on average by 31% globally in the last 24 months. However, whislt the prices of flights of legacy airlines have increased by 40%, those of low-cost airlines have increased by just 6%.
The top 5 most expensive destinations on average to travel by plane from any origin, as of June 23, are: Qatar, Mali, Jordan, Panama and Sudan.
The top 5 cheapest average destinations for air travel from any origin, as of June 23, are: Bolivia, Slovakia, Malaysia, Nepal and Colombia.
These increases have affected legacy companies more than low-cost ones.
Northern Europe, Southern Europe and the Mediterranean, and Asia are the regions where the average prices have risen the most.
The Middle East, with the exception of Qatar that shows a rise in rates due to the celebration of the soccer world cup, has experienced a less pronounced rise than other regions.
By region, the data highlights that:
In Northern Europe, none of the countries analyzed have returned to 2021 levels. The most expensive country to travel to right now is the Netherlands, followed by the United Kingdom. The UK is the one that has raised prices the most in 2023 compared to 2021, while Germany and France have had high price peaks during 2022 and Norway is the country that has remained the most stable during these two years.
According to experts, such as Gavin Eccles of GE Consulting, “focusing on northern Europe, in the key markets of the United Kingdom and Germany, flight prices for the period of January 23rd to June 22nd showed strong increases in the first few months, as travel from these markets continued to flourish through the winter and early summer, and airlines were able to continue to generate strong returns. And, as we approach the summer peak, 2023 prices have come back in line with the high prices seen in the summer of 2022, highlighting the strong resilience in these key markets and the importance these markets play for the strategic approach of the airlines”.
For their part, the countries of Southern Europe and the Mediterranean have increased all their prices, highlighting the case of Portugal, which is currently the most expensive country to travel to, followed by Spain, Greece, Turkey and Italy.
In North America, we see how Mexico is a country that has maintained its most stable prices with little variation over these two years, while Canada right now is the country with the most expensive flights, followed by the United States, which had a very high flight price peak in the last quarter of 2022. According to the analysis of Gavin Eccles, “in the case of the United States, flight prices have remained more stable in the period from January to June 2023 and are not experiencing peaks and falls as strong as in 2022. This can be explained by the reduction in capacity of 2023 so that airlines were able to present a more aligned schedule and not have the need for price increases and reductions as was being seen, since that capacity and demand were not aligned”.
In South America, Argentina is the country that has had the highest prices these two years, but in 2023 it will end up equaling the prices of 2021. Colombia remains more regular, while Peru, Chile and Brazil had higher prices in 2022 than in 2021 and this 2023 they have been falling, even remaining higher than in 2021.
In the case of the Pacific region, it is observed that Australia has always stood out above other countries that receive more flights (Thailand, Indonesia, Vietnam and Malaysia) and h had a peak of high prices at the end of 2022, while the rest of the countries had the same rise but not as sharply.
In Asia, prices have been evolving since 2021 and none of the most visited countries (South Korea, Taiwan, China, Japan and India) have recovered prices to the level of the first months of the post-pandemic. The case of India stands out since, with more than 80% of the seats in the national market, of which around 70% are in the hands of low-cost airlines, flight prices have remained very stable and airlines have not been able to make significant price increases. According to Gavin Eccles, Aviation and Tourism Consultant at GE Consulting, “This is putting a lot of pressure on the Indian aviation situation and challenging airlines in this market to be profitable. On the other hand, China is finally in a position to raise prices as market conditions allow travel again and as demand increases significantly, airlines can significantly increase their yields.”
The Middle East stands out for its upward price evolution, especially in the case of Qatar, with significant peaks at the end of 2022 coinciding with the World Cup. For its part, Saudi Arabia had a very high peak at the beginning of 2022, with prices stabilizing downwards since then, but without reaching 2021 prices.
In Africa, the main countries analyzed by number of flights were Kenya, Egypt, Morocco, Tunisia and South Africa, where significant increases were observed in the case of Kenya and Egypt, and a slight decrease in the price of flights in the case of South Africa.
The reason for price rises:
According to Carlos Cendra, Mabrian’s Chief Marketing Officer, prices increases can be explained by “the fact that the aviation industry has suffered a strong impact from increased costs in recent years that has been transferred to prices, as well as the inevitable effect of inflation. The main factor seems to be the strong increase in the price of oil during various periods and the forced change of operations that many companies, especially legacy companies, had to make during the pandemic. The radical stagnation of flights due to the health crisis led to a restructuring of the long-term fuel purchase strategy, which later, when operations were reactivated, was affected by the conflict between Russia and Ukraine and the rise in oil prices. Not surprisingly the purchase of fuel represents between 15% and 35% of the operating costs of the airlines. Although this is an important factor for the profitability and viability of airlines, there are also other costs that have been affected, such as personnel, which after a labor crisis in 2022 has seennumerous strikes and protests for conditions, which have undoubtedly increased costs”.
On why these increases have affected legacy companies more than low-cost ones, Cendra comments that “the fixed cost structure supported by these two business models is different, but so are the commercial policies and we cannot deny that there is a very strong demand that is allowing companies to recover lost profits ifrom previous years.”
According to Gavin Eccles, an aviation and tourism consultant at GE Consulting, “low-cost airlines see prices for 2023 (January to June) generally in line with what they charged in 2022, while legacy airlines are seeing a reduction in prices for the same period. It can be assumed that the summer of 2022 had mostly last-minute bookings and traditional airlines were able to increase prices significantly, since in the post-pandemic period they had a significant demand from tourists. Fast forward a year, seat capacity levels on low-cost airlines have risen significantly with the new interest, and this has meant that the price per seat (performance) has remained more stable. However, for traditional aviation, given that they are seeing strong competition from low-cost airlines, there is an emphasis on price reductions, as these airlines seek to remain competitive in aviation’s new normality“.