(Bloomberg) -- More people are flying in premium cabins for leisure trips despite airfares rising on surging oil prices and demand, and that’s helped offset a slower recovery in business travel, according to the International Air Transport Association.
“There’s a strong pent-up demand for travel,” IATA Director General Willie Walsh told reporters in Singapore on Monday. “Consumers had disposable income during the two years of the pandemic. People have, consumers have, saved and therefore they are prepared to spend that money.”
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A quick recovery is crucial for global aviation, one of the industries hardest hit by the pandemic as governments shut borders and the skies emptied. While travel has started picking up in most markets, some countries, particularly in the Asia-Pacific region, have yet to fully open up.
China, for example, is tightening Covid-related restrictions again and discouraging citizens from flying, putting a significant dent in global tourism.
“It’s clearly disappointing that China is pursuing this Zero Covid approach,” Walsh said. The country was a very “strategically important market where a lot of airlines were looking at growth opportunities. I think airlines will be reassessing that, given the continued closure of the borders in China.”
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The war in Ukraine has added another challenge for airlines, as sanctions against Russia have pushed up oil prices by limiting supply, meaning the single-biggest cost item on their balance sheets has become even more of a burden. That has forced airlines globally to raise ticket prices.
“Given the financial performance of airlines, there’s just no way an airline can absorb that additional cost,” Walsh said. “It’s inevitable that those higher oil prices will find their way through to consumers in the form of higher ticket prices.”
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