In early June, the International Air Transport Association reduced its 2018 profit forecast by 12%, blaming rising fuel and labor costs and in response, air carriers including American Airlines, Delta and United, announced that passengers should prepare for higher ticket prices. In addition to the price increases, the industry lacks new pilots, causing many planes to stay on the ground, and labor unions to raise their voices for overworked staff due to the shortage. On top of this, “overtourism” is challenging airports’ capacities as they experience unprecedented crowds, which begs the question, is this year’s summer travel season in danger?
Rising ticket prices
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Brent crude, the global oil benchmark, is up 12% this year, increasing to around $75 a barrel, which means an increase of more than 25% as compared to 2017. To combat this increase, most airlines will either raise their base prices or sell fewer cheap tickets, causing summer holidays becoming more expensive for passengers who have not yet booked their flights.
Lack of Staff
With an industry-wide lack of pilots, although airlines like Emirates and Qantas Airways are always focusing on hiring, both companies have struggled to use their planes as often as they had planned due to delays from recruiting and training new staff. Boeing estimates industry demand to be for 637,000 more pilots over the next 20 years, but airlines claim that they are facing more financial stress and risking their profits, partly due to higher pay for pilots in a time of rising fuel prices.
Meanwhile, labor unions around the world are continuing to push for more pilot benefits. Ryanair pilots are forming labor unions across Europe, hoping to fight for better working conditions, and Air France pilots are striking over pay. As argued by airlines, this is another significant factor for higher travel costs for air passengers this summer.
A historically high demand for leisure travel this summer may also turn vacation dreams into a nightmare. With more people traveling, the top 10 destinations in the world (which today host 46% of international arrivals), these locations will have to accommodate 70 million more tourists in just 3 years.
Following this, in addition to rising fuel prices and a lack of pilots, the industry faces one more major issue – an insufficient capacities at airports, which may lead to a significant increase in flight disruptions this summer.
Henrik Zillmer, CEO at AirHelp, comments: “While fuel prices are rising, we don’t expect airlines to cut down their profits. It’s obvious that they will simply level it up by increasing ticket prices and actually making the travelers to cover for those losses.
“We also expect major flight disruptions during this year’s summer travel season. In line with the law, airlines need to compensate travelers for flight disruptions, and all the hassle this brings. This is why we created AirHelp five years ago, and we will continue to work tirelessly to help travelers get the compensation that is rightfully theirs and support them throughout the compensation claims process for disruptions they experience. The law is the law and it must be respected.”
Flight disruptions: These are the passengers’ rights
For delayed or canceled flights, and in instances of denied boarding, passengers may be entitled to financial compensation of up to $700 per person in certain circumstances. The conditions for this stipulate that the departure airport must be within the EU, or the airline carrier must be based in the EU and landing in the EU. What’s more, the reason for the flight delay must be caused by the airline. Compensation may be claimed within three years of the disrupted flight.
Situations deemed as ‘extraordinary circumstances’ such storms or medical emergencies mean that the operating airline is exempt from the obligation to compensate passengers. In other words, ‘extraordinary circumstances’ do not qualify for flight compensation.