Commission pressure on airlines for the rally in ticket prices

2023-11-07 12:39:41

Political pressure is intensifying on Airlines for the “hot” fares throughout Europe. Brussels is investigating a recent hike in ticket prices to the Old Continent after airlines charged passengers significantly more this summer, reaping huge profits. EU Transport Commissioner Adina Valean told the Financial Times that EU officials “they look in detail at exactly what is happening in the market and why, since average air ticket prices across Europe were 20%-30% higher in the summer of 2023 compared to 2019, according to EU data. which were published in October.

THE European Commission has no power to regulate fares, but the commissioner’s intervention increases pressure on airline giants to raise prices amid a travel boom and supply chain issues. “We are continuing the investigations because we do not have a full, detailed explanation,” Valean noted, stressing that the Commission wants to establish whether the increases are a long-term trend.

Brussels is concerned that high air fares could hit areas of the EU, such as islands or isolated regions, that rely on air travel for connections to the rest of the bloc. “We can’t become regulators micromanaging prices or enforcing them, I don’t think that’s possible or desirable. On the other hand, we are concerned about how the prices could be done barrier to connectivityValean pointed out. Her intervention increases political pressure on airlines to raise fares.

Brussels is concerned that high air fares could become a barrier to connectivity.

The Italian government, for example, proposed a reduction in fares on routes to certain islands, but partially backtracked in September and instead gave the Competition Principle the country new powers to monitor prices. Airlines are free to set their own fares in accordance with EU laws. and market liberalization has historically reduced prices and opened up new routes. The increase in demand for flights recorded this year, combined with a shortage of aircraft, has sent ticket prices soaring. Many airlines grounded planes during the pandemic, supply chain problems hit deliveries, while inflationary pressures in fuel and labor also increased costs.

So while the low-cost carriers such as Ryanair and Wizz Air flew more compared to 2019, most European airlines flew fewer routes. Nevertheless, most of them, including its owner British Airways, IAGher Air France-KLM and her Lufthansa reported record profits over the summer, partially reversing the damage to their balance sheets during the pandemic. The global industry has more than doubled its profit forecasts this year as a result of rising demand for travel after the pandemic. The European transport commissioner said she feared higher prices would continue due to an imbalance between demand for travel and a limited supply of new aircraft.

Airlines, finally, face a higher price for pollution after member states and the European Parliament recently agreed on rules that will accelerate the phasing out of free carbon credits. Airlines say they are generally supportive of the ambitious climate goals of the EU, but insist they need more support, particularly in the development of green aviation fuels.