After two years of post-Covid improvement and recovery, seat supply outstrips demand this summer. Result: margins are lower for companies and tickets are cheaper for travelers.
Were the airlines’ eyes bigger than their stomachs? “It’s almost clear,” said Yves Crozet, a transport economist and professor at the University of Lyon 2, who was interviewed on Tuesday in the Forum show. In recent days, leading carriers have warned that they will not meet their annual targets.
On July 22, the German group Lufthansa revised its profit forecast downwards. On the same day, the Irish low-cost airline Ryanair published a quarterly net profit of almost half, due to an average fare down 15% over one year. “People are traveling (…) but we mostly have to make reductions to fill our planes,” argued general manager Michael O’Leary.
Low prices will continue
In an effort to fill their planes, airlines are slashing prices this summer. “This is good news for users.
According to the Directorate General of Civil Aviation in France, the average price of international flights departing from France fell 4.4% year on year in June, and even 5.7% for North Atlantic routes. In Switzerland, a one-way ticket to London on Ryanair in mid-August costs just 25 francs.
Low prices will continue “since air transport is an extremely productive activity”, analyzes Yves Crozet. However, the economist notes one condition: occupancy rates must “not fall too low”, otherwise flights will no longer be profitable. Companies are ready to sell the last seats “because an empty seat doesn’t make any money”.
Airlines face stiff competition, particularly in the North Atlantic. So there is “a price war, as traditionally happens when there is an oversupply”, concludes Yves Crozet.
Radio subject: Coralie Claude
Web Adaptation: Julie Liardet with ats