As we emerge from the pandemic-induced travel hiatus, many of us are itching to embark on our long-awaited adventures, seeking solace in distant lands. Having been one of the last countries to resume cross-border travel, China shares this sentiment with many aspiring holidaymakers. The prospects of a summer getaway are finally on the horizon, but before we set our sights on new horizons, there are several factors to consider, with cost taking centre stage.
Air travel has always held an air of luxury, a privilege reserved for a select few, with only around 20 per cent of the world’s population ever having experienced the exhilaration of flight. However, post-crisis airfares have skyrocketed worldwide after the pandemic, further solidifying its status as an exclusive indulgence.
The Asia-Pacific region, in particular, bears the brunt of this surge, witnessing airfares soaring up to 33 per cent higher compared to the same period in 2019. North America and Europe also feel the pinch, albeit to a lesser extent, with fare increases of 17 and 12 per cent, respectively.
In the heart of Hong Kong, discussions about the cost of air travel have become the talk of the town, often accompanied by wistful sighs as memories of the pre-pandemic halcyon days resurface. Unfortunately, the forecast is not in our favour, as fares are projected to continue upward this year and into 2024.
Supply and demand dynamics play a pivotal role in shaping these escalating prices. Flights to popular destinations such as the United States, Britain, and Australia are the most expensive from Hong Kong due to the high demand for these routes. Additionally, the availability of seats contributes to the equation. But what has caused this scarcity in supply and surge in demand?
The answer to the latter is simple to grasp. After years confined to our homelands, many of us yearn to break free from the shackles of the pandemic and explore the world once more. This desire is a testament to how much we had taken international travel for granted, a privilege abruptly revoked. Furthermore, those eager to venture forth into the world now possess more disposable income than they would have had if not for the missed overseas escapades of the past couple of years, making them more willing and able to bear the higher costs.
In China, domestic tourism revenues have surged to 101 per cent of pre-pandemic levels during the recent five-day “golden week” holiday, witnessing a staggering 274 million people embark on journeys during the Labor Day or May Day break. As one of the first major holidays since China eased its inbound quarantine requirements, the number of tourists travelling abroad has also peaked in the last three years.
According to Trip.com, the average price of an outbound flight ticket during this holiday period was 2,104 yuan (US$304), approximately one-third higher than in 2019, as demand outpaced the supply of available seats. Flight ticket bookings skyrocketed by nearly 900 per cent compared to the same period last year, with hotel bookings witnessing a remarkable increase of almost 450 per cent, as stated by the online travel agency.
The supply side of the equation is a tad more intricate. Labour shortages, both within airlines and at airports, rising costs, and the closure of Russian airspace due to the Ukrainian invasion all contribute to the current predicament. Asia’s prolonged closure against the coronavirus, compared to Europe and North America, sheds light on the elevated prices in the region, as the recovery process here is still in its nascent stages.
Major carriers face the arduous task of ramping up their capacities to pre-pandemic levels, compounded by some retired older aircraft during the crisis. Moreover, the two leading aircraft manufacturers, Boeing and Airbus, need help to promptly meet the demand for new machines due to supply chain disruptions. On the other hand, several smaller players that helped maintain competitive prices have yet to return to specific routes, leaving a void in the market.
Budget airlines such as Jin Air, Jetstar Japan, Jeju Air, Mandarin Airlines, SpiceJet, and IndiGo are among the familiar names yet to grace the runways of Chek Lap Kok in Hong Kong. Similarly, Alitalia, Air Namibia, Flybe, and the 61 other airlines that succumbed during the pandemic will not return anywhere.
The conundrum of labour shortages may appear perplexing. Where did everyone go? However, during the no-fly days at the pandemic’s peak, many airlines resorted to cost-cutting measures, including layoffs and early retirement schemes for pilots and staff. Training replacements take time and must be timely.
Another factor influencing staffing levels post-pandemic is the heightened cautiousness among employees regarding even the slightest signs of illness. Consequently, operators need a slightly larger roster to cover their staffing needs, considering the increased likelihood of sick leave.
The closure of Russian airspace has significantly impacted fuel consumption for airlines forced to divert their routes around this vast country. European airlines, especially those based in Scandinavia, have been particularly affected, granting Chinese carriers a comparative advantage on Asia-Europe routes, as they still enjoy flying over Russian territory.
Unfortunately, predictions of a decline in airfare prices remain elusive in the near future. However, as the effects of climate change intensify, the notion of higher pricing for this luxury service, which undeniably exerts a significant environmental impact, becomes increasingly justifiable.
As we embark on our long-awaited journeys, let us approach this new era of travel with enthusiasm and a keen awareness of the evolving landscape. The allure of exploration, the thrill of discoveries, and the enriching experiences that await us will undoubtedly make air travel costs seem like a small price to pay.
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