Freedom at a cost
Updated: Jul 27, 2020
Excerpts from a post published here.
There's a lot of optimism in the ME travel industry, supported by early signs of recovery. As people adjust to the new reality in incremental steps, the aviation ecosystem will look to find profitability while balancing convenience and safety.
Neeraj Goswami, associate director of Air Business at Cleartrip, explained that airlines have been carrying fewer passengers per plane than before in order to adhere to social distancing norms. This has resulted in them charging a higher ticket price per passenger.
"There are also additional costs of airport procedures that airlines have had to pass on to customers, so ticket prices have unfortunately gone up as a result," he said. "There is also a huge pent-up demand with limited supply now, so airlines can afford to sustain high prices without adversely affecting flight loads."
Over the next few months, as more capacity comes in, the current level of prices would cause demand to lag behind supply, he said. "Hence, prices will fall and airlines will find other pockets of efficiency to maintain margins. Price wars that were common on certain routes will become less frequent. We think prices will go down over the next 3-4 months, but they'll probably stay higher than they were 12-18 months ago."
Image source: https://viewsplash.wordpress.com/