Real cost of flying cheaper: IATA says airfares down 40%, but planes are stuck in traffic

Economic Times

3 days ago

Despite lower ticket prices, the aviation industry faces significant headwinds. IATA highlights supply chain issues, with aircraft delivery delays stretching to 14 years and impacting airline profitability. Regulatory hurdles and safety concerns, including incomplete accident investigations and conflict zone risks, further cloud the skies for airlines and passengers alike.
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Despite sky-high fuel prices, taxes, and a turbulent global economy, the real cost of flying has nosedived—by 40% over the past decade. So says Willie Walsh, Director General of the International Air Transport Association IATA ), speaking at the group's annual general meeting in India, its first in the country in 42 years.But while ticket prices have dropped, airline growth is being clipped by some serious supply chain headwinds.Representing over 350 global carriers, IATA projects airlines will earn a combined profit of USD 36 billion this year on revenues of USD 979 billion. That's a net margin of 3.7%, or a modest USD 7.20 profit per passenger, reported PTI.'Our profitability doesn't match the value we create,' Walsh said, pointing out that aviation supports 86.5 million jobs and accounts for 3.9% of global GDP.Even so, India's booming aviation sector is seeing surging demand and rising concerns about airfare fluctuations—despite the overall drop in inflation-adjusted ticket costs.Meanwhile, the aviation industry is stuck in a holding pattern—literally—when it comes to aircraft deliveries.Walsh blasted the manufacturing sector for its poor performance: a 17,000 aircraft backlog means customers face a 14-year wait from order to delivery. Aircraft deliveries scheduled for 2025 are already 26% below what was promised just a year ago.More than 1,100 aircraft less than 10 years old are currently mothballed, equating to 3.8% of the fleet—nearly triple the pre-pandemic average. The annual fleet replacement rate has slumped to 3%, far below the healthy 5–6% mark.That shortage isn't just an inconvenience; it's costing money. 'Some demand goes unmet. Scarcity drives up maintenance and leasing costs,' Walsh noted. And it's unlikely to improve anytime soon—manufacturers say it could take until 2030 to untangle the mess.Adding to the turbulence, Walsh took aim at bad regulation, calling it a major threat to affordability and progress. 'Regulators aren't spending their own money. Business leaders think in terms of cost-benefit. Politicians? Not always,' he quipped.On safety, there's more troubling news: fewer than half of aviation accident investigations in the past six years have produced final reports, meaning vital safety lessons are being lost.Last year, commercial aviation saw just seven fatal accidents across 40.6 million flights, with 244 fatalities among 4.8 billion passengers—a strong safety record overall. But conflict zones have added new risks, with two civil aircraft downed and airports bombed in military operations. Navigation system interference near war zones is also on the rise.Flying may be cheaper than ever, but between plane shortages, regulatory red tape, and global unrest, the skies aren't as clear as they used to be.(With inputs from PTI)