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European Airfares Undercut Consumer Product Inflation

According to recent data released by the International Air Transport Association (IATA), European travelers are enjoying airfares that beat inflation as the aviation industry recovers from the impact of COVID-19.

people walking inside airline on cheap european airfares
Photo by Markus Winkler on Pexels.com

The latest traffic figures indicate that European airlines are only 3.6% below their peak in 2019. Despite the inflationary environment, Europeans are still choosing to travel. In June, average airfares in Europe were about 16% higher than before the pandemic. However, this increase lags behind the average consumer prices index for the EU, which stood at 20% above pre-pandemic levels in June.

IATA unveiled the data at the Wings of Change Europe (WOCE) event in Amsterdam, the Netherlands. This event, led by KLM as the main sponsor, serves as a prominent gathering for aviation leaders, regulators, and industry experts to address the most pressing matters in air transportation.

European Airfares Below Consumer Price Index

“European air travel is continuing to recover strongly and is on track to exceed the 2019 benchmark in 2024. The competitiveness of Europe’s air transport market is holding airfare inflation at 16%–four percentage points below the rises that we have seen in the broad consumer price index. Considering the extreme volatility of jet fuel prices and increases in workforce salaries, this is a significant achievement and stands in contrast to the continually increasing charges being pushed by our infrastructure suppliers,” said Willie Walsh, IATA’s Director General.

Regulators Approve Increased Charges

Recently, the UK CAA approved a significant increase of 56% in charges for London Heathrow Airport. Despite their service failure earlier this summer, the regulator also approved a 26% increase for NATS, the UK’s air navigation services provider.

Similarly, regulators granted a 37% increase for charges at Amsterdam’s Schiphol Airport in the Netherlands, which also encountered service disruptions.

IATA notes the role of regulators in fostering favorable conditions for airline competition. The Association credits European regulators for implementing consumer-friendly regulations, allowing airlines to offer various options by unbundling travel packages.

European Slot Regulation

The European slot regulation also balances consistent schedules and increased accessibility for new entrant airlines. However, regulators must also acknowledge areas where they can further enhance competitive conditions. Key aspects include stricter oversight of monopoly infrastructure providers to reduce charges. IATA also proposes reforming consumer protection regulation (EU261) to ensure a fairer distribution of accountability across the aviation value chain.

“The recovery of Europe’s air transport market is bringing with it even more competitive market conditions. Consumers will see that with more routes and more airlines to choose from. In total, last year saw 20 new airlines born in Europe. This is important because a more competitive air transport market will make Europe a more competitive place to do business,” said Walsh.

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