Cheap flights fade as fuel costs push airfares higher
Rising oil prices have driven up international airfares this year, with experts warning of further increases by year's end, while record passenger numbers coexist with historically thin airline profit margins.
Airfares have climbed noticeably this year, making it harder to find bargain deals for autumn or Christmas travel. According to Federal Statistics Office data, average international ticket prices in the first half of this year were 8.5% higher than a year earlier, and experts believe the increase could accelerate further by year's end.
Airlines pull back on discounts
The main driver behind rising fares is the surge in oil prices, which has pushed up jet fuel costs. Airlines are passing part of this burden on to passengers, and as a result, major carriers are now avoiding aggressive discount campaigns. This is reflected in recent financial results: large European carriers including Lufthansa Group, Air France-KLM and Ryanair have all seen profits and profit margins decline in recent months.
Passenger numbers set to hit a record
Despite high prices and geopolitical instability, demand for air travel remains strong. The International Air Transport Association (IATA) forecasts that airlines worldwide will carry more than five billion passengers this year for the first time ever, setting a new industry record. Even so, high costs are squeezing profitability across the sector — IATA estimates the industry's overall profit margin at only about 2%, the lowest level since the Covid-19 pandemic.
Smaller carriers under pressure
Concerns are growing over the financial stability of smaller airlines, particularly as the winter season, traditionally more difficult for the industry, approaches. Companies with limited financial reserves face serious risk from elevated fuel and other costs. Recent developments underline the sector's difficulties: US low-cost carrier Spirit Airlines was forced to halt operations, while Lufthansa shut down its subsidiary CityLine, citing rising fuel costs among the reasons. Latvia's airBaltic has also filed for creditor protection under US law.
