Rising airfares in Middle East and Asia Pacific pose threat to recovery in aviation sector: ACI-Asia Pacific

Increasing airfares in the Middle East and Asia Pacific pose a threat to recovery in the aviation sector even as the airport charges remain stable, Airports Council International (ACI)-Asia Pacific said in a release on Wednesday.

Despite substantial efforts by airports to freeze or lower airport charges in 2022, there was an average 53 per cent increase in airfares throughout 2022, compared to 2019, according to ACI-Asia Pacific's latest industry outlook.

The flight ticket prices were above the global average -- up 35 per cent in real terms and 53 per cent in nominal terms over 2019 -- although they were trending down towards the end of the year as traffic recovers, it said.

This reveals a fundamental imbalance in the financial stability of the industry as well as pose a threat to the sector's full recovery in 2023, it said.

''Despite a consolidated recovery of domestic traffic as compared to 2019 levels, and a progressive improvement of international traffic, with peak performances in Middle East and South Asia, the financial health of airport operators continued to be in distress, with 10 consecutive quarters in the red both in terms of EBITDA and net profit margin,'' said Stefano Baronci, Director General, ACI Asia-Pacific.

Moreover, fuel prices, wage inflation, insufficient seat capacity relative to demand and a lack of airline competition on specific routes are the major determinants in the increase in airfares, he emphasised.

The increase in airfares, according to the release, was significantly above the global average with airline yields (revenue per RPK) were 29 per cent higher in 2022 than in 2019 in nominal terms.

This is in sharp contrast to the financial health of airports, which are still losing money, with regional EBITDA (earnings before interest, taxes, deduction and amortisation) and net profit margins being negative for the 10th consecutive quarter since 2020, ACI-Asia Pacific said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)