Trends In Airfare, Jet Fuel Price, And Inflation. Also: The Evolution Of Hydrogen-Powered Aircraft
International Air Transport Association (IATA)
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Welcome back! This week we have updates from #COP29, analyze trends in airfares, jet fuel prices, and consumer prices, and issue a call for industry and governments to work together with practical actions to make Europe more competitive and sustainable. Let's get to it.
In-Depth Analysis Of The Week: Airfare, Jet Fuel Price, And Inflation
This new report presents trends in airfares, jet fuel prices, and consumer prices from January 2015 to August 2024. It serves as a practical reference for airlines, regulatory authorities, and other industry professionals by offering a clear view of historical price changes.
Airfares have risen at a slower pace than consumer prices (measured by the Consumer Price Index, CPI) over the past decade. This indicates that air ticket prices have not fully kept up with inflation, especially in comparison to jet fuel costs, which have significantly outpaced consumer inflation.
Jet fuel currently accounts for about 30% of airlines’ operating costs, and it is the largest and most volatile expense category.
When airfares fail to keep pace with inflation, and with jet fuel prices in particular, it means that airlines absorb part of the cost increases on their margins rather than passing them fully onto consumers.
Learn more and download the full report.
IATA Wings Of Change Europe Conference Calls For EU To Prioritize Competitiveness and Sustainability
The International Air Transport Association’s Wings of Change Europe (WOCE) event concluded with a call for industry and governments to work together with practical actions to make Europe more competitive and sustainable.
Highlights included:
? In his keynote, Filip Cornelis, Director for Aviation, DG MOVE, European Commission, explained that the new Commission would likely offer continuity of policy direction, but with a greater focus on improving competitiveness, through a focus on the recommendations of the Draghi report.
He was clear that there would be no change of course on aviation sustainability, arguing that aviation needed to be a "bright green, not hopelessly brown” sector.
? A CEO panel discussion with Andrea Bernassi (ITA Airways), Luis Gallego (IAG), Christian Scherer (Airbus) and IATA DG Willie Walsh continued the emphasis on European competitiveness.
The reform of EU 261 was a clear ‘win’ the new Commission should focus on, along with taking steps to prevent the Single European Sky from ‘dying’.
Taxation was regarded as a blunt instrument unsuitable for driving forward the sustainability agenda, and entirely in opposition to the aims of the Draghi report.
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News In Brief
Chart of the Week: Evolution Of Hydrogen Aircraft Fleet To 2050
Hydrogen-powered aircraft, currently in development, will be a solution for eliminating operational CO2 emissions from aviation.
According to one of the IATA Net Zero Roadmap technology scenarios, hydrogen could represent 18% of the fleet by 2050, dominated by regional aircraft.
This could reduce global aviation CO2 emissions by 6% by 2050.
In this scenario (see chart), the hydrogen aircraft fleet would be dominated by small regional aircraft (30-69 seats), representing 54% of the fleet in 2050, followed by large single-aisle (18% of the total), medium single-aisle (14%) and small single-aisle (13%).
These aircraft could reduce CO2 emissions from the global regional fleet by 53% by 2050.
While IATA has assumed a “regional first” strategy for introducing hydrogen aircraft into the market, other studies have explored “mid-sized” or “wide body” first strategies.
The impact that hydrogen aircraft will have in 2050 will depend on the size of the aircraft, its range, the entry into service date, and the rate of penetration into the market.
The life cycle GHG impact depends on the source of the hydrogen, which delivers maximum emissions reductions when hydrogen is made from water and renewable energy (green hydrogen).
More on the #WeeklyChart and hydrogen-powered aircraft.
Thanks for reading! Safe travels and please consider sharing this newsletter.
??Fleet Development Manager | SAS Group | Airline Fleet
2 个月Insightful news, thank you!
Security Officer at Aviation Security Group at Ahmedabad Airport
3 个月Overregulation is undoubtedly a challenge for Europe’s aviation sector. While safety and sustainability are essential, excessive or fragmented regulations can increase operational costs and stifle innovation, making it harder for the industry to stay competitive globally. A balanced approach is crucial—one that ensures safety and environmental goals while enabling growth and innovation.
Aviation Manager/ Mechanical Engineer
3 个月Very helpful
Gestión de Operaciones&Logística, Magallanes. Safety (SMS) & Ops. Management Consultant. MCC/ELT Instructor A320, Storm Flight Center. (PIC/SFI A320 FAM, PIC B767, B737, B707, DC8, C130, DHC5/DHC6)(DGAC)(FAA)
3 个月You’re absolutely right! Over the past decade, airfares have indeed risen at a slower pace compared to overall inflation as measured by the CPI. This trend highlights how airlines have struggled to fully pass on rising costs, particularly jet fuel expenses, to passengers. Jet fuel, being a highly volatile cost component, has a profound impact on airline profitability, accounting for approximately 30% of operating costs. When airlines absorb these cost increases instead of reflecting them in ticket prices, it compresses their margins and puts pressure on their financial performance. This dynamic underscores the importance of operational efficiency and revenue diversification (e.g., ancillary services or cargo operations) for airlines to remain sustainable in a competitive industry where price sensitivity among travelers is high.
Marine Professional. Former Director of Operation.
3 个月You may manage your business other ways, but do not increase Air Faire in this moment. Thank You.