AirAsia CEO says high airfares aren’t going anywhere

AirAsia CEO says high airfares aren’t going anywhere

A problem sweeping the travel industry right now, and it seems to be the number one problem amongst many, is exorbitantly high airfares.

Even low-cost carriers, which struggle to increase capacity amidst labour shortages, soaring fuel prices and closed airspace, have set prices that have stumped travellers.

And if you think this is going anywhere, it’s not – at least that’s according to AirAsia’s CEO Tony Fernandes.

Speaking last week at the Aviation Festival Asia in Singapore, Fernandes revealed his belief that airlines have been under-pricing their services and that the industry has a way to go in charging passengers an appropriate price.

However, higher airfares have not deterred or slowed down flight demands or demand projection and Fernandes believes that these airfares are more authentic prices that should have been charged pre-pandemic.

“After not having flown for three years, passengers’ value of travel has also increased,” Fernando said.

“If you can’t have something for three years, you start to see how significant it was.”

With many airlines facing challenges that hinder their ability to maintain and increase required capacity, classic supply and demand become a consideration. A shortage of available seats cannot meet the heightened demand, which is why Fernandes believes passengers can expect to be greeted with higher airfares this year.

Tony Fernandes, CEO AirAsia

Alongside this, airlines literally cannot acquire more planes due to the manufacturers’ ability to speed up production rates being impacted by the pandemic. Without new planes readily available and old planes suffering from technical set-backs, carriers have to outsource third-party agreements for wet leasing and maintenance, increasing expenses.

Fernandes said AirAsia has faced these challenges, but the low-cost carrier will have its fleet of over 200 planes back in service by May.

“The main obstacle for us has been getting our planes back into active service, and bringing about 204 planes back is no easy feat,” he said

“And what was initially predicated on being finished by May of next year, we’ll be able to do by May of this year.”

The global commercial aviation industry struggles to get back on its feet due to similar problems AirAsia, so, unfortunately for travellers, getting back to pre-pandemic prices may still take a while.

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