Airports Raise Concerns Over Airlines’ Excessive Airfares Impacting Travel Demand

Airports Council International Asia-Pacific (ACIAP) has voiced its apprehensions regarding airlines charging exorbitant airfares, claiming that it poses a risk to the recovery of the aviation industry. The council accused airlines of taking advantage of limited competition and pent-up demand to compensate for losses incurred during the COVID-19 pandemic. ACIAP, in collaboration with Flare Aviation Consulting, analyzed approximately 36,000 routes across the top 10 aviation markets in the Asia-Pacific region. Their study revealed a significant increase of up to 50% in international airfares, while domestic routes experienced an increase of less than 10%. Notably, India, the United Arab Emirates, Singapore, and Australia witnessed the highest surge in airfare prices.

Despite a gradual return of domestic travel in the first quarter of 2023, the analysis showed that domestic airfares continued to rise in key markets such as India, Indonesia, Saudi Arabia, South Korea, and Japan. ACIAP highlighted that while major international airlines announced record profits, airport operators reported negative EBITDA margins for ten consecutive quarters, particularly in China, Japan, Thailand, and India.

Stefano Baronci, Director General of ACI Asia-Pacific, emphasized that high airfares place an additional financial burden on the already struggling aviation sector. Baronci urged airlines to adopt fair pricing strategies that support recovery and protect consumer interests. He also suggested that if necessary, governments should consider market liberalization measures such as open skies policies to ensure fair competition and controlled airfares. ACIAP clarified that airport charges account for less than 4% of airline costs, and their study found no correlation between airport charges and airfares.

During the pandemic, airports in the Asia-Pacific region froze or reduced airport charges, including landing, parking, and passenger fees. They also provided incentives to support the industry at its peak. Furthermore, airports made significant investments in capital expansion and technology to enhance safety and efficiency during this challenging period.

ACIAP stressed the positive role played by airports in the region throughout the pandemic, emphasizing that airport charges were not the cause of airfare increases in the Asia-Pacific and Middle East regions. It highlighted the substantial investments made in technology, such as self-check-in stations, biometric facial recognition, and security screening equipment, which indirectly impact passenger demand and contribute to the profitability of airlines.

ACIAP’s concerns regarding airlines charging excessive airfares underscore the need for fair pricing practices to support the recovery of the aviation industry while safeguarding the interests of consumers.