Increasing airfares in Asia-Pacific and Middle East pose threat to recovery, says ACI
Airfares in Asia-Pacific and Middle East surged as nations emerged from pandemic-related restrictions, according to the Airports Council International (ACI) Asia-Pacific’s latest Airport Industry Outlook.
The fourth edition of the…
Airfares in Asia-Pacific and Middle East surged as nations emerged from pandemic-related restrictions, according to the Airports Council International (ACI) Asia-Pacific’s latest Airport Industry Outlook.
The fourth edition of the Airport Industry Outlook, developed in partnership with Mott MacDonald, provides an analysis of airfare trends during the pandemic and in the recovery phase, and summarises the 2022 year-end performance of the airport industry in terms of traffic recovery and economics.
The airfares in Asia-Pacific and Middle East were above the global average – up 53% (nominal terms) or 35% (real terms) in 2022 vs 2019, although fares were trending down towards the end of the year as traffic recovers.
Surging airfares
Commenting on the surge in airfares, Mr. Stefano Baronci, Director General, ACI Asia-Pacific said: “Despite a consolidated recovery of domestic traffic as compared to 2019 levels, and a progressive improvement of international traffic, with peak performances in Middle East and South Asia, the financial health of airport operators continued to be in distress, with 10 consecutive quarters in the red both in terms of EBITDA and net profit margin.
Despite substantial efforts by airports to freeze or lower airport charges in 2022, the average 53% increase in airfares throughout 2022, compared to 2019, reveals a fundamental imbalance in the financial stability of the industry as well as pose a threat to the sector’s full recovery in 2023. Fuel prices, wage inflation, insufficient seat capacity relative to demand and a lack of airline competition on specific routes, are the major determinants in the increase in airfares.”
The increase in airfares were significantly above the global average with airline yields (revenue per RPK) that were 29% higher in 2022 than in 2019 in nominal terms. This is in sharp contrast to the financial health of airports, which are still losing money, with regional EBITDA and Net Profit margins being negative for the tenth consecutive quarter since 2020.
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