Ticket price increases for many airlines in the U.S. and Europe boost airline profits
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Civil Aviation Resources Network, February 14, 2025: According to Simpleflying, due to limited capacity and strong consumer demand, airlines no longer need to "fill" flights through discounts, thus enhancing their pricing power over fares.
Rising fares have improved the performance outlook for airlines on both sides of the Atlantic. Major US airlines (including Delta, Alaska Airlines and United Airlines) have all predicted that they will achieve strong profits this year. Most European airlines are also expected to improve their profits.
US airfares have seen the biggest increase in 21 months, and European airfares have risen 6% year-on-year
According to the US Department of Labor, the year-on-year increase in US airfares in December 2024 was the highest in 21 months. According to data from tourism research organization ForwardKeys, European airfares rose 6% year-on-year in 2024.
The global aviation industry organization IATA (International Air Transport Association) expects North American airlines' net profit per passenger to increase by about 15% year-on-year in 2025, while European airlines expect their annual net profit per passenger to increase by 12%.
Capacity constraints drive up fares, delayed aircraft deliveries and engine problems become industry bottlenecks
The rise in fares reflects airlines' tight control over capacity. Due to aircraft supply shortages and engine problems, industry expansion plans are limited, driving up prices.
About 10% of Europe's fleet is grounded, Turkish Airlines' fares rise 25%
According to travel data company OAG, about 10% of Europe's aircraft are grounded due to repair and maintenance issues. Turkish Airlines currently has about 17% of its fleet grounded, so its capacity this quarter has been cut by 19% from the same period last year, resulting in a 25% increase in its average fare.
Ryanair benefits from price increases, CEO expects summer fares to continue to rise
Ryanair reported last month that its December quarter profit exceeded expectations due to increased pricing power. Ryanair CEO Michael O'Leary said that limited capacity in Europe could push up summer airfares.