Airline ticket prices are rising again

The European Union's new environmental regulations are driving airlines to new big increases in ticket prices, especially for those flying from Europe. One by one, airlines have started to pass on to passengers the high cost of the so-called sustainable aviation fuel – SAF, which they are forced to use up to 6%, soon to 10%. These fuels today, due to reduced production, cost 2.7 times more than traditional ones. Fuel consumption typically accounts for 15% to 25% of the total cost of flying a passenger aircraft.

This is essentially the end of very cheap air travel, as the prospects for new and continued growth are created. The Lufthansa group launched the increase last month, raising prices to 72 euros per ticket for departures from Europe. Now the IAG group, which controls, among others, the national carrier of Britain, British Airways, Spain, Iberia and Air Lingus, is announcing price increases.

All of this actually comes after a 15% increase in addition to the rate of inflation of air tickets recorded at the beginning of 2024 in the European aviation industry. These increases were mainly due to non-environmental reasons such as increased demand after the pandemic, wars and rising fuel prices.

The shift to cleaner and more sustainable jet fuels is forcing companies to raise prices to finance the huge costs involved, was the message sent by Luis Gallego, chief executive of the IAG group, speaking to the Financial Times. He even went so far as to warn that air travel will become so expensive due to environmental regulations that some people will stop flying either because they won't want to pay such high prices or simply won't be able to afford it. 'afford them.

He further added that since these environmental regulations imposed by the EU to achieve net zero emissions are European and not global, European airlines will ultimately become less competitive. In Europe, airline ticket prices were outpacing inflation by around 15% as of early 2024, ING noted in an industry report in May. Air fares are under increasing pressure worldwide, but higher taxes and fees are also playing their part, especially in Europe.

Sustainable aviation fuels, also known as SAF, are produced from non-fossil fuels such as recycled vegetable oils and can emit up to 70% less carbon dioxide than traditional aviation fuels.

The peculiarity is that today these sustainable aviation fuels are produced in very small quantities, making them much more expensive. Airlines have sought more government support from the EU and Britain to boost production and cut costs.