For the past three years, the aviation industry has been suffering one blow after the other, starting from the nearly complete half of operations during the first months of the COVID-19 outbreak, to the Russian invasion of Ukraine and what it meant to travel routes to and from Europe. Now, airlines are reporting yet a new set of challenges.
During the first few months of coronavirus lockdowns, most airlines announced laying off thousands of staff workers in a bid to cut costs amid the crisis that slashed their profits to historic lows.
Source: Bloomberg
While recovering from the damage inflicted by the pandemic had a slow start when vaccines were rolled out, controlling the viral spread, hopes for an end to the crisis faced a new threat amid the Russian military operation in Ukraine last February, one that forced several changes on airline routes involving European territories and led to sanctions against several Russian businesses, including airlines.
The ongoing war in Ukraine has also caused a significant change in fuel prices worldwide, which have been pushed to unprecedented high levels, prompting record global inflation, reaching a 40-years level in the United States by approximately 8%.
As a result of growing inflation rates in different parts of the world, interest rates have also been raised in more than one country, in an attempt to slow the pace of ongoing global inflation. Inflation has also left negative consequences on many local currencies exchange rates, such as the Indian rupee, the Japanese yen, and the Egyptian pound.
All of these negative numbers have been reflected in travel booking dips as well as surges in ticket prices, clearly affecting annual travel plans during the summer, including those of expatriates who used to visit their home countries over the summer.
In the United States, domestic flights have seen prices skyrocket to nearly 47% since January 2022. India's SpiceJet has also raised fares between 10% - 15%.
South African carrier grounds flights after running out of funds https://t.co/icJYnIxJkm
— Al Jazeera English (@AJEnglish) June 1, 2022
While raising airfares has been working for some of the biggest airlines so far, other carriers are facing the risk of bankruptcy and shutting down.
Since the beginning of 2022, a total of eight different airlines have closed their doors for good, while many others are still bracing for more difficult times, as long as fuel prices continue to spike and inflation continues to deepen.
