Airfares likely to remain high in 2024 amid aviation’s green push and strong demand

If you thought you paid eye-watering prices for flight tickets this year, think again.

Airfares, which soared during the post-pandemic travel boom, are likely to remain high in 2024 and for several years, according to industry analysts and executives.

Airlines’ higher operational costs, use of expensive sustainable aviation fuels, inflationary pressures, geopolitical tensions and supply chain bottlenecks are likely to keep fares high, experts said.

“Specific routes and regions may see higher fares due to increased travel demand, limited capacity, or geopolitical instability,” Linus Bauer, founder and managing director of Bauer Aviation Advisory, told media.

“For example, long-haul international routes will experience higher fares compared to domestic or regional routes.”

Real return fares per passenger are estimated to reach $288 in 2023, up from $284 in 2022, $231 in 2021 and $216 in 2020, but still below the pre-Covid levels of $315 in 2019, according to data from the International Air Transport Association (Iata).

An economy-class one-way ticket, non-directionally averaged and excluding taxes and fees, from the Middle East to North America cost $544 in September 2023, up 1.5 per cent compared to $536 in September 2022, according to the latest available data by Cirium.

For travel departures from the UAE, airfares on average are up 6 per cent in the fourth quarter of 2023 compared to pre-pandemic levels, amid strong travel demand in winter, Hugh Aitken, Skyscanner’s flights expert and vice president of strategic relations and development, told media.

But as the worst of the Covid-19 pandemic has receded, countries have reopened their borders and airlines are reporting record profits, why are ticket prices expected to remain high?

First, airlines are facing a multi-trillion dollar bill to decarbonise their operations.

A whopping $5.1 trillion of capital investments may be required to bring the global aviation industry to its goal of net-zero emissions by 2050, with most of that to be channelled into the production of sustainable fuels and renewable electricity generation, consultancy McKinsey & Company said in a report.

Sustainable aviation fuel (SAF), a biofuel that produces lower carbon emissions than traditional jet fuel, is expected to account for 65 per cent of aviation’s carbon mitigation in 2050, according to Iata.