Airports and Airlines have that funny kind of relationship where neither one wants to see the other doing much better than they are. With airlines in Asia-Pacific, such as Qantas and Air New Zealand, recording bumper profits, it’s not all that surprising that airports in the region are feeling a little left out.
Airlines are eating too much of the cake
Last week Airports Council International Asia-Pacific released a stinging attack accusing airlines of charging “excessive airfares that threaten the industry’s long-term recovery.” For good measure, it also said that airlines are capitalizing on the lack of competition and pent-up demand to recover losses from the COVID-19 period while airport charges have remained steady since the pandemic.
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In collaboration with Flare Aviation Consulting, ACI Asia-Pacific examined around 36,000 routes in the top 10 aviation markets in Asia-Pacific. The study revealed that international airfares had increased by up to 50% while those for domestic routes increased by less than 10%. The markets with the highest airfare increases were India (+41%), United Arab Emirates (+34%), Singapore (+30%) and Australia (+23%).
Despite domestic demand progressively returning in the first quarter of 2023, the analysis found domestic airfares continued to increase in several important markets, including India, Indonesia, Saudi Arabia, South Korea and Japan. Based on that, ACI Asia-Pacific (ACIAP) said it was worth noting that several major international airlines recently announced record profits, while airport operators have been reporting negative EBITDA margins for the last ten consecutive quarters, particularly in China, Japan, Thailand and India.
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ACI Asia-Pacific director general Stefano Baronci said that any reduction in demand from high airfares increases the financial burden on the already stressed sector. He added:
“Airlines should exercise fair pricing that supports recovery and safeguards consumers’ interests. A supply-demand imbalance should not be exploited by airlines at the expense of customers by restricting the capacity, especially [the] international one which is a key driver of social and economic growth and a major source of revenues for the airport sector. We urge airlines to carefully consider the long-term impacts of their pricing decisions.”
If that fails Baronci believes governments must consider liberalising markets through policies such as open skies, which will allow competition while keeping airfares under control. While airlines spent just as much time bemoaning high airport charges, ACIAP said these “account for less than 4% of the airline cost base and this study demonstrates no correlation between airport changes and airfares.”
Touchless technology needs to be paid for
It also said that airports did their bit throughout the pandemic by freezing or reducing airport charges, including landing, parking and passenger fees and providing incentives at the pandemic’s peak. ACIAP also said airports in the region had made significant investments in capital expansion and technology during this period to ensure a secure and smooth airport experience.
Photo: Changi Airport Group
Stressing the positive role airports in Asia-Pacific have played during the pandemic, Baronci said:
“On fact is clear. As it has been largely in the past, airport charges are not the reason for airfare increase in Asia-Pacfic and the Middle East.”
It is clearly evident that many major airports around the region have invested heavily in technology, such as new self-check-in stations, biometric facial recognition and security screening equipment. These are vital elements of a passenger’s air travel experience that indirectly affect demand, the result of which is now being seen in airline profit results.
Source: ACI Asia-Pacific
Airports Say Airlines Reducing Air Travel Demand With Excessive Airfares
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