‘Good old days’ of low airfares gone?

Of all the sectors in the global economy affected by the Covid-19 pandemic and its associated restrictions, the travel sector – and specifically airlines – were probably hardest hit.

They lost billions and the ones which did survive had to restructure and rethink their business models.

One of the business models which is, and will continue to be, under the most pressure is the one which offers low-cost air fares.

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This is because its profits are built on volume – and passenger numbers are still not yet back to pre-Covid-19 levels.

We have seen the pressures on the airline industry playing out in South Africa.

Apart from the state airline, South African Airways – which has been mismanaged into bankruptcy by successive ANC cadre deployees – even a successful private operation, Comair, has been forced out of the skies because of the damage it suffered during Covid-19.

Now, with as much of a quarter of airline capacity being taken out of the system and demand beginning to recover quickly, it is inevitable that airfares will start soaring.

That is the consequence of the capitalist paradigm under which we live.

And airlines are particularly adept, with their arcane pricing systems, of hiking prices almost instantly in response to changes in the supply and demand matrix.

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For the foreseeable future, then, we are not likely to see the “good old days” of ludicrously low airfares – ludicrously low because many of these prices were loss leaders to attract customers in bulk.

The prices currently being seen are more of a realistic representation of the actual costs of flying.

And that is likely to be the case for a long time – or at least until fuel prices drop dramatically, which is not likely, either.

It was fun while it lasted … but also too good to last.