plane-ticket-increase

European plane tickets with a 21% increase and perpetual cancellations

Significant more expensive plane tickets and great uncertainty linked to perpetual cancellations. This is what European travelers can expect in the future. According to a recent study by Allianz Trade, trade credit insurer, this turbulence within European aviation will continue to persist in the months to come.
Cancellations have become the norm in Europe. This is the only way for airlines to maintain their profit margin in an era of extremely high fuel prices. “By not having the plane take off, you not only save fuel, but also labor costs. Airlines try to limit the use of additional staff as much as possible,” explains Johan Geeroms, Director Risk Underwriting Benelux at Allianz Trade.
The profitability of European airlines is the lowest in the world. This is because 25% of their turnover is devoted to salaries, while the world average is 19%. Mr. Geeroms: “In Europe, there are not only more employees in airlines, but the salaries are also higher. This is why the workforce is decreasing in Europe (-8% compared to 2021), while it is increasing elsewhere in the world of aviation. Take the example of North and South America, where the average is around +14%. »
According to Mr Geeroms, European airlines are caught in a vicious circle. On the one hand, they have to deal with the lack of personnel, and on the other hand, with strikes by employees demanding higher wages and better working conditions. For companies, cancellations and price increases represent the only solution to still show a somewhat attractive financial image.
"While European ticket prices fell by 39% between 2014 and 2020, we expect a 21% increase by the end of the year," Geeroms said. “This could significantly increase turnover, but it will not be enough to end the year on a positive note. For the third consecutive year, European airlines have lost billions. European aviation may even break even by next year. »
In the longer term, Geeroms sees yet more challenges for aviation. “The pressure to “green” aviation continues to grow. This will require huge investments. We believe that the railways will become an increasingly formidable competitor for European aviation. Europe has one of the longest rail networks in the world located in a relatively compact space with a high network density. In addition, the majority of railways are electrified. Railways are therefore a major disruptor to aviation,” says Geeroms.

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