Airline tickets could become even more expensive, aviation execs warn

Air tickets may become more expensive — thanks to the lack of refining capacity and the financial state of airlines, said William Walsh, the DG of the IATA. The decline in refining capacity during the pandemic, and higher jet fuel prices caused by the increase in demand for fuel are “of concern” to the airline industry, Walsh told CNBC’s Hadley Gamble on Wednesday. US refining capacity dropped by 5.4% in 2022 since it peaked in 2019 — the lowest in eight years. The dip came in the wake of refinery closures and conversions to produce more renewable fuels. Walsh added that while consumers are paying higher ticket prices, airlines are not necessarily making a profit. “And given the financial state of many airlines ... It’s not that airlines are making money, [they] are just passing on a cost that they can’t absorb themselves, and that they can’t avoid,” he said. Airline ticket prices have spiked by 25% in the past year — the biggest annual jump since 1989. In April alone, airfares surged 18.6%, according to the Bureau of Labor Statistics. But another factor could contribute to even higher ticket prices — Russia’s announcement of a military mobilization, said Qatar Airways CEO Akbar Al Baker. Russian President Vladimir Putin on Wednesday announced a partial military mobilization in Russia, placing the country’s people and economy on a wartime footing as Moscow’s invasion of Ukraine continues. Al Baker said that China’s Covid policies are the “smallest of [his] worries,” and that the airlines’ greatest concern is the escalation of the Russia-Ukraine war. “For me, the biggest worry is the conflict spreading, which [will then] fuel inflation, putting more pressure on the supply chain,” he added. “The net result will be less passengers in my aeroplane.” Nevertheless, Al Baker maintained that Qatar will continue flying to Russia as long as it is operationally safe to do so.<br/>