Airfares across Asia are sky-high this year. Here's why

CNN

Asia Pacific travelers will continue to pay more for flights than usual this year, even though planes are returning to the skies at a rate never seen since the outbreak of the pandemic.

According to Skyscanner Travel Insight data, regional airfares were 33% more expensive in February than in the same month of 2019. This compares with increases of 12% in Europe and 17% in North America, respectively.

Customers are sometimes paying twice as much as they were four years ago in some cases.

According to American Express Global Business Travel (Amex GT), a business class ticket to Paris from Shanghai would cost $5,650 in 2019. It now costs more than $11,500. This travel platform was created from the credit card company.

According to Amex GBT, the average price of a business-class seat from Singapore to Shanghai was also twice that of 2019.

This surge is part a larger trend. Global flight tickets are usually more expensive than pre-Covid levels because of a variety of factors, said Hugh Aitken (Vice President of Flights at Skyscanner).

However, passengers in Asia Pacific are experiencing higher price rises than others, which highlights the uneven global recovery.

This problem won't go away anytime soon.

Amex GBT forecasts indicate that Asia's economy fares from North America to Europe will rise by 9.5% and 9.8%, respectively, this year. This is nearly double the expected price rise for European economy routes to other geopolitical regions. Similar outlook is expected for business class cabins.

Road to recovery

Experts believe that rising costs, labor shortages, and the closures of Russian airspace are driving up prices.

However, the main problem is that Asia is still at the beginning stages of its reopening.

Contrary to Europe and North America, where there have been no restrictions on travel, many Asian destinations like Japan and South Korea were only reopened for business in 2022.

After three years of quarantine restrictions, Mainland China lifted the international arrivals restriction in January. Last week, visas were issued to all visitors including tourists.

Aitken stated that "in the markets where restrictions were the last to lift and [flight] capacity was last restarted, the price difference is highest." This is APAC right now.

Airlines are not able to add service immediately even when there is demand. Amex GBT's global principal air practice line leader, Jeremy Quek, stated that they often need long lead times in order to place crew and ground staff, coordinate airports, and move aircraft.

He noted that "Planning an airline flight schedule can take months."

These numbers show it. Jane Sun, Trip.com CEO, stated that despite China's opening, outbound flight capacity is only 15% to 20% below pre-Covid levels.

She stated this in an earnings call that the bottleneck was "largely restricting the overall recovery pace for China's outbound travel."

According to Amex GBT, the flight capacity for long-haul international routes such as between Europe and Asia is just 17% below 2019 levels.

"Even though airlines capacity is returning, it's not returning at the same rate as we expect pent-up demand. Quek said that this is the core of the matter.

"Reduced capacity and growing demand are the keys to rising prices."

Additional costs

As part of its invasion of Ukraine, Russia closed its airspace to airlines coming from dozens of other countries last year.

Many flights were forced to reroute due to this, which has made travel more difficult and more costly. These restrictions remain, with the most severe impact being between Asia and North America and Europe.

Amex GBT reported that a flight from Tokyo, London, which now must head east over Alaska, Canada, Greenland, and the North Pacific will take 2.4 hours more time. It is also likely to use around 5,600 gallons of fuel, an increase of 20%.

Fuel prices have also skyrocketed. Qantas CEO Alan Joyce stated that his company's fuel cost was 65% more than it was in 2019.

He stated this in a speech earlier this month that "airfares will have to go up than they were before Covid because fuel costs are higher."

Joyce stated that the carrier was also incurring higher costs and required time to retrain personnel who were out of work during the pandemic.

Our pilots drove buses in Sydney and Melbourne for quite a while, as they were not allowed to fly. He explained that to bring a pilot back, we must put them through 23 hours simulator training and five sections of flying.

Consumers' impact

Experts don't think that people will be discouraged from traveling, despite the sticker shock experienced by some travellers.

"Currently, we don't see any signs of an impact on consumer confidence or traveler demand. Aitken stated that Skyscanner platforms are experiencing strong traveler demand in 2023.

Sun stated that she expected the recovery of outbound Chinese travel to "pickup the pace in the next quarters" as the airlines continued to restore service.

Many airlines also offer catchy discounts in response to outcry about their prices.

Qantas, Jetstar and its budget carrier Jetstar have announced discounts of more than 1,000,000 seats on a mixture of international and domestic routes this year.

Japan Airlines also attempted to lower the prices of tickets, but it was met with greater demand than expected.

When the carrier attempted to launch a campaign for domestic flights at discounted prices, its website crashed.

The company stated in a statement that "our system was unable" to handle traffic.

The prices aren't increasing on all routes. Aitken stated that consumers should still be able "to find competitively priced flights," especially if they are able to be flexible about where and when they travel.

He said that the prices of flights from the United Kingdom and Vietnam or from the United States to Malaysia are slightly lower for bookings made later in the year than they were a year ago.

Aitken advised that "in the current climate, it is the easiest way for travelers to get good deals is to make reservations early."

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