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Air travel chaos in Europe could be over — but higher ticket prices are here to stay

Travelers to and within Europe this year should be able to avoid the levels of disruption experienced during last year’s summer of chaos, but higher ticket prices look set to stay.

The aviation industry was left in disarray last summer as it struggled to ramp up operations after the sudden closures — and subsequent redundancies — triggered by Covid-19 lockdowns. A number of European airlines limited ticket sales, canceled flights, and adjusted timetables, as airports imposed passenger traffic caps.

But the unique circumstances of last year’s travel chaos are “largely behind us,” according to Airports Council International (ACI).

Heathrow Airport, Europe’s largest airport by passenger volume, said it is “well prepared to serve demand over the summer peak” this year. While Gatwick Airport, the U.K.’s second-largest, told CNBC via email that it’s “not anticipating the same issues airports encountered last summer.”

“Airports have gone to extraordinary lengths this year to coordinate and plan all the many different operations present at an airport — to do … everything they can to minimize any disruption for passengers,” the ACI organization of airport authorities told CNBC via email. 

Overall European air passenger traffic is currently 7.6% lower than pre-pandemic levels, according to the organization’s data, although five European markets — Turkey, Cyprus, Bosnia-Herzegovina, Greece and Albania — have fully recovered to their 2019 traffic figures.

Air navigation safety organization Eurocontrol told CNBC that it was preparing for high levels of traffic this summer, noting that daily flights through European airspace were now at their highest level since the start of the pandemic.

Popular destinations, however, “are always susceptible to unforeseen perturbation,” it added, including from weather and industrial action, which can impact air traffic flow management. 

Sky-high prices

Demand for air travel appears to be defying inflationary pressures, with total passengers up 16.2% year-on-year for May, according to ACI. That’s despite flight prices having soared since the pandemic, well beyond the rate of inflation in Europe.

European airfares were up 36% in the month of May compared to the previous year, according to ACI data, while euro zone inflation was at 6.1% for the same period.

“I do think fares need to be permanently higher than they were in 2019,” Alexander Irving, European transport analyst at AB Bernstein, told CNBC Monday.

“Airlines are going to have to pay for more of their carbon emissions … plus the inflation element,” he said, adding that pilots, cabin crew and ground staff were all demanding higher wages.

“It’s all going to end up in the fare eventually.”

Increasing ticket prices will likely serve low-cost carriers such as Wizz Air and Ryanair well, Irving said, as customers are still keen to travel but are likely to trade down to more cost-effective services.

Ryanair boss Michael O’Leary said last year that the era of the 10 euro ($10.33) flight was over in an interview with BBC Radio 4′s “Today” program.

“We think that 40 euros needs to edge up towards maybe 50 euros over the next five years. So the £35 average fare in the U.K. will rise to maybe £42 or £43,” he said in Aug. 2022.

Source: CNBC