Will Air Travel After the Pandemic Likely to Be More Expensive?

The Current State of Prices and Trends

As I reflect on the past six months, it's clear that many things have become more expensive. A mattress that costed me the same amount three weeks ago now costs 150 dollars more, representing a 37% increase in price. Gasoline, takeout food, haircuts, and water bills have all seen significant increases, with milk prices alone having risen by 6.8% since 2019.

Airfare, which was notably inexpensive in 2020, has also seen a 25% price increase. Given this context, it's reasonable to anticipate that travel, including air travel, will likely become more expensive in the coming years. The increased costs suggest a future where aviation industry services will be pricier than before the pandemic.

Future Travel Expectations

The travel landscape is expected to become more complex and potentially slower. Various measures, such as vaccine passports and pre-flight tests, are likely to be mandatory. These requirements will introduce additional bureaucratic steps, likely causing delays at both the destination and point of departure.

Moreover, pricing for travel services will remain relatively low to stimulate travel demand initially. However, as the global economy reaches a certain level of stability, prices are expected to rise significantly to cover operational costs. It is important to note that the recovery of the travel industry in the United States or Europe will not mirror the global recovery, as many regions have started their vaccination efforts much later.

Long-Term Economic and Market Forces

While some sectors might temporarily decrease travel prices, such as rental cars with their skyrocketing costs, the goal for airlines is to keep prices manageable to attract former flyers. Currently, airlines are operating with aircraft flying at less than half capacity, leading to significant financial strain. Their primary objective is to rebuild customer trust and start turning a profit. As this phase of recovery progresses, airlines may gradually increase prices to maintain their financial health.

Additionally, the potential for a recession could exacerbate these trends. With less competition, as many businesses have permanently shut down, airlines will face higher operational expenses. Interest rate increases will compound the pressure, necessitating higher government expenditure on national debt.

Conclusion

In summary, post-pandemic air travel is anticipated to be more expensive, both due to operational costs and market forces. However, airlines are likely to keep initial prices low to attract customers. As the global economy stabilizes and the travel industry recovers, expect travel expenses to increase. It is important for travelers to prepare for potential price hikes and plan accordingly.

With these expectations in mind, it is crucial for travelers, particularly those planning international trips, to keep an eye on updates and prepare for potential increases in costs. Whether it's airfares, car rentals, or hotel bookings, prices may see a significant rise in the coming years.