Several major European airlines are experiencing operational hurdles due to delayed aircraft deliveries, rising maintenance costs, and disruptions within the aviation industry.
While these airlines brace for another quarter of strained profits, residents and expatriates based in the European Union may see higher fares, fewer flight options, and changes to long-haul itineraries.
Aircraft delivery delays
Persistent delivery delays from Boeing and Airbus have forced airlines to rely on older, less efficient aircraft. This is not something a person who fears flying will want to hear! The older aircraft impact operational costs and fuel efficiency.
According to Lufthansa CEO Carsten Spohr, the German carrier now anticipates a five-year delay on its Boeing 777X orders, pushing deliveries to 2026. In a recent statement, Spohr emphasised, “We don’t expect to get them until 2026. And we need them.”
Lufthansa is set to report a third-quarter operating profit of €1.3 billion, reflecting a 9 per cent decrease year-over-year due to these ongoing challenges.
European airlines, particularly Lufthansa, are struggling to remain competitive against Chinese and Gulf airlines, which benefit from lower operating costs and government support.
Lufthansa representatives recently noted in an email to Reuters that “European airlines are in an extremely unequal competitive position with China, as well as with airlines from the Persian Gulf and Bosporus.”
British Airways and Air France-KLM face setbacks
Other major airlines, including British Airways and Air France-KLM, are also dealing with supply-chain disruptions. British Airways has announced further cancellations to its long-haul routes due to engine delivery delays from Rolls-Royce. Air France-KLM, facing a decline in bookings partially linked to the Paris Olympics, anticipates a hit in its upcoming third-quarter earnings report on November 7.
Will these disruptions lead to plane ticket price hikes?
As aircraft shortages lead to limited capacity, airlines may have the opportunity to raise ticket prices, provided that demand remains strong. Neil Glynn, managing director at AIR Control Tower, commented, “Ordinarily one might expect a lower level of capacity as a result of these delays to boost results, in a robust demand environment.” However, he added that both European and North American airlines have been producing “disappointing results” despite the favourable market conditions.
The airline sector’s problems have led to a downturn in share prices over the past six months, with only a minor recovery recently. IAG, the parent company of British Airways, has been an exception, with its shares rising by over 20 per cent in the last six months. This growth is attributed to IAG’s strong presence in the North Atlantic market, where it faces fewer delivery setbacks.
Fuel price forecast
Despite these challenges, airlines could see some financial relief in 2025 if fuel prices decrease. Lower fuel costs would ease the burden on airlines’ operational budgets, potentially stabilising ticket prices in the coming years. Ryanair, recently made headlines with their plans to go paperless with tickets as part of a green strategy, but reportedly more of a cost-cutting system.
In the meantime, these airspace industry dynamics might mean fewer options and pricier tickets in the short term.
