High airfares may be becoming the lasting norm for travelers, according to Wong Hong, chief of the Association of Asia Pacific Airlines, who made the remark at an association conference on Friday. The AAPA represents 18 airlines across the Asia-Pacific region, and Wong said the cost pressures squeezing carriers are unlikely to fade quickly.
The central pressure is fuel. Jet fuel now costs about $180 a barrel, roughly double the price of about $80 a year ago. Fuel accounts for roughly one-third of airline operating costs, so the jump has hit carriers hard. The conflict in Iran, which began in late February, has added to the strain, and airlines have responded by raising fares, surcharges and fees. Major carriers in the Asia-Pacific region, Europe and North America have all passed higher costs on to customers.
Airlines face a timing problem as well. Fuel is often bought months after ticket prices have already been set, which leaves carriers exposed when prices rise sharply in the interim. That gap means a fare locked in months earlier may not cover the fuel an airline later has to buy, forcing carriers to absorb losses or revisit pricing mid-cycle.
Wong said it is unclear whether another round of fare increases would be feasible, noting that passengers differ widely in how sensitive they are to price changes. Some travelers will pay more without hesitation, while others will cut back or choose cheaper options. Airlines are trying to strike a balance between absorbing higher costs and losing customers to rivals or to staying at home.
Demand has already responded. Asia-Pacific passenger traffic fell for five straight months, from April through August, before rebounding only marginally in September. Even so, regional passenger traffic is still up 1.9 percent for the first nine months of the year, suggesting that travelers have continued to fly despite higher prices. The pattern points to a market that is still growing overall while becoming more cautious at the margins.
Fuel is not the only pressure on the industry. Airlines are also dealing with delays in aircraft deliveries and the rising cost of maintaining older planes. Together, these factors make it harder for carriers to bring costs down quickly, even if fuel prices ease. Older aircraft that stay in service longer than planned require more upkeep, while delayed new deliveries keep airlines flying the planes they already have.
The outlook for travelers, then, is one of sustained higher costs rather than a short-term spike. Whether fares settle at current levels or climb further will depend on how long fuel prices stay elevated and how much more passengers are willing to pay. For now, Wong's assessment suggests the industry is preparing for a longer period of expensive tickets rather than a quick return to earlier price levels.