It’s almost a given that airfares will rise this year, compounding the misery for air travelers after an average fare hike of about 10 per cent in 2019.
On selected high-traffic routes, fares could be 20 per to 30 per cent higher this year than last. But the big question is how long will higher fares last?
In the short term, the obvious culprit in more expensive flights is the worldwide grounding last March of the Boeing 737 Max, which removed an estimated 41 million seats from the air.
The grounding followed the second of two deadly crashes of the 737 Max within six months, which killed all aboard, for a total of 346 fatalities, including 18 Canadians.
Hopes of a prompt return to service for a retrofitted 737 Max have been repeatedly dashed. U.S. regulators, badly burned in having certified the Max with insufficient care, are re-examining every aspect of the plane, a new aircraft introduced in 2017.
The FAA’s cautious approach means that by January of this year, Calgary-based WestJet Airlines Ltd. had delayed the planned return to service of its 13 Maxes nine times.
Air Canada, which has 24 grounded Maxes, was expecting to have 50 Maxes in service by this year’s peak summer season.
The Max isn’t just another commercial airliner. It is the fourth and latest generation of the Boeing 737 family, with more planes in the air – 7,000-plus – than any other aircraft type.
Carriers like WestJet and Air Canada were counting on the Max, faster and more fuel-efficient than its 737 predecessors, to expand their networks and the variety of flight options they could offer customers.
Instead, it now appears the Max will not return to the skies until autumn of this year, long after the busy summer season.
WestJet, Air Canada, the Toronto-based Sunwing Airlines Inc. discount carrier and other airlines with Maxes in their fleets have had to keep older, less fuel-efficient planes in the air make up for the absence of the Max.
That has pushed up the airlines’ operating costs, which in turn puts upward pressure on airfares. It also reduces the usual abundance of bargain fares, and inflates the price of last-minute getaways.
This is going to be an expensive year for air travelers. The airlines deserve credit for minimizing inconvenience. But for all their efforts at minimizing passenger inconvenience, “There’s no getting around the fact that airplanes are missing,” says Seth Kaplan, founding editor of Airline Weekly.
There’s reason to expect that higher fares are here to stay.
Air travel is booming. But it’s doubtful the world’s aircraft makers will be able to keep up with growing demand.
The number of air travelers is expected to almost double, to 8.4 billion, by 2037, up from 2018’s 4.4 billion.
Traffic will grow by an annual 4.3 per cent over the next decade and a half, a forecast of the International Air Transport Association, the global airline trade body (IATA).
That means about 190 million additional air travelers in each of the next 15 years.
And that, in turn, will require that an estimated 40,000 or so new passenger and cargo aircraft be built, to accommodate sustained surging passenger and e-commerce demand.
Can all those needed additional planes be built quickly enough to match rising demand? If the answer is no, higher airfares will be a reality for the next decade.
The short-term outlook isn’t positive.
There are just two major makers of large airliners, the near-duopoly of Chicago-based Boeing Co. and France’s Airbus SE.
Boeing eventually will resume making a lot of aircraft in the single-aisle narrow-body market that dominates global air travel, and is served by its 737 family.
But how soon will that be?
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In making a more thorough examination of the Max than it did when it first certified it in 2016, the U.S. Federal Aviation Administration has discovered other problems.
Those include electrical-cable bundles placed too close to sharp objects in the fuselage – a threat to safety warned of by Boeing engineers but ignored by Boeing executives.
The FAA has also found that fuel tanks on many grounded Maxes scheduled for delivery are filled with tools, metal shavings and other debris.
That evidence of shoddy construction has eroded the FAA’s confidence in Boeing. And it will be a factor in re-certification of the Max, after FAA approval, by the European Aviation Safety Authority (EASA), Transport Canada and aviation authorities in China, which has the world’s biggest fleet of Maxes and was the first to ground them.
Neither can Airbus be counted on to fill the void.
Airbus has an eight-year backlog for its popular A320 narrow-body planes, for most airlines the only practical alternative to the 737 family.
Airbus is not going to make Boeing’s mistake in ramping up production at the risk of safety problems. Airbus also worries that even a modest increase in A320 production could find Airbus caught with too much production once the Max returns to service.
That leaves China’s state aircraft maker, a distant third in the market for large passenger airliners. But the Commercial Aircraft Corp. of China, or Comac, is just starting on production of its C919, aimed at the 737 and A320 market.
The C919 falls short of requirements for FAA and EASA certification. That effectively limits C919 sales to the Chinese market.
Over the next decade and a half or so, Airbus, at its current record rate of production, will build only 13,000 A320 aircraft. If Boeing somehow matches that number, that still leaves about 13,000 needed additional passenger and cargo planes with no one to build them.
The global market consists of more than narrow-body aircraft, to be sure. It also takes in cargo planes and other passenger aircraft types.
But as things look now, there will be too many air passengers chasing too few seats before long, absent a much bigger global presence for Comac or technological breakthroughs, neither of which seem likely prospects.
One of the biggest modern breakthroughs, an Airbus A380 super-jumbo soon to go out of production, was a technological marvel that the market rejected.
And don’t look for relief on the demand side.
Global air traffic has increased about 1.5-fold so far this century, despite terrorism, a Great Recession in North America and a European economic crisis, the SARS epidemic and a string of airline bankruptcies.
People are flying in greater numbers than ever. And today’s aircraft industry isn’t geared to handle anticipated significant increases over today’s record number of fliers.
The iron law of supply and demand suggests that airfares will outpace inflation, and quite possibly by a significant amount, for years to come.
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