Just too expensive – flight cancellations could become the norm

Compared to its international competitors, European aviation has high personnel costs and few incentives to hire additional personnel. According to an analysis by Allianz Trade and credit insurer Acredia, airlines must adjust with losses for the third year in a row despite higher revenues.

Save on duration and accommodation
By the end of 2022, airfare prices are likely to be a fifth higher than a year earlier, and prices are not expected to peak until the first quarter of 2023. However, demand is likely to remain high. Many travelers would save on accommodation or the length of their stay to afford the more expensive transport.

From the point of view of the analysis, the transition required by the EU to low-carbon transport poses even greater challenges than the corona crisis. In the medium term, the financial experts in European traffic expect benefits for the more environmentally friendly rail.

Travel more often by train
On the one hand, rail transport is helped by the fact that almost all companies are state-owned and therefore can finance themselves more cheaply, and on the other hand, increasing environmental awareness is motivating more people to travel by train. On the other hand, airlines should invest massively in new planes or carbon-free fuel – but they don’t have the resources for that at the moment.

EU environmental requirements threaten airlines’ profit margins, the analysis said. The requirement to blend in 20 percent renewable fuels (SAF) by 2035 will increase the price of jet fuel by 30 percent. The target of 38 percent SAF blending by 2045 would increase costs by 57 percent. Airlines already spend 25 to 30 percent of their income on fuel. To keep these costs under control, the public sector must provide cheaper and readily available green jet fuel.