Aircraft reach maximum altitude as capacity constraints enter the market
Do you want to travel abroad? Be prepared to scrape your nails into the bottom of the piggy bank.
International airline ticket prices doubled as massive demand and shrinking capacity allowed airlines to raise fares to combat rising fuel costs.
Even in the face of a new wave raging in the COVID-19 pandemic, rising interest rates, and recession fears, consumers who fly business class are paying more than $18,000 to get to Europe and the United States while those in the economy are paying around $5,000 in wages, according to the CEO. Graham Turner Flight Center.
(For those travelers who sit on large balances of loyalty points, airline seat redemption, especially in business or first class, is nearly impossible to obtain and very expensive, with customers complaining that flights to Europe cost as much as up to 1.5 million points.)
And it’s not just the corporate market – the first to see a rebound in demand – it’s coming back to life. The international leisure market began to take off and moved beyond the initial group of those visiting the family to regular vacationers.
A bigger-than-expected rebound in demand was behind Flight Center’s earnings upgrade on Monday. The travel agent announced that it turned from a loss to a positive profit after interest, tax depreciation and amortization over the six months to June 2022.
While it will continue to report a loss for the entirety of 2022, it is a lower number than the company had previously set.
Rising airfares helped drive the Flight Center’s total transaction revenue to $10 billion for fiscal year 2022 (versus $3.95 billion in 2021) but its return to pre-COVID levels requires airlines to increase capacity.
The more optimistic forecast mirrors that of Qantas, which recently confirmed that core EBITDA for the second half of fiscal 2022 will reach $450 million to $550 million, after a $1.5 billion payment. in debt during that period.