Lockdowns, masks, social distancing and closed skies. There is no doubt that no one misses that life in the shadow of the COVID-19 pandemic. Many industries were harmed during the pandemic, but the industry that was hit the hardest is no doubt the flight and tourism industry.
New data revealed in Great Britain shows that as a result of the pandemic, 64 airlines closed down for good. Among them was Alitalia, Italy's national airline.
Along with airlines shutting down and the chaos in the industry because of COVID, another concerning trend was created which is that prices have begun to rise. According to statistics from Gulliver, the prices of flights in Israel rose by 10% on average compared to 2019.
"The first reason for rising prices of flights is that the price of fuel is high," explained the CEO of Gulliver Travel Agency, Ziv Rosen. "The airlines had to match themselves to the fuel prices, and that continued to the customer. Furthermore, the war between Russia and Ukraine had an effect because of the suspension of activity of Aeroflot and Ukraine Airlines in Israel and because of suspension of flight activity over Ukrainian skies."
Likewise, Rosen explained that "of course, there is also the matter of supply and demand. If around the world there are now fewer airlines, there is less competition. In Israel, on the other hand, there is now a situation in which the number of flights that were operated was smaller in 2022 than in 2019 because of COVID, but the demand to fly was higher than supply."
According to Gulliver's statistics, the 2022 number of passengers from Israel to other countries was at 80% of the 2019 figures.
"Another reason for the higher prices is the fact that there were fewer connection flights in 2022 which are known to be cheaper flights than direct flights," said Rosen. "This affected the prices in the market. This situation was created for two reasons. The first is once again the war in Ukraine because Kyiv and Moscow were popular connection destinations.
"Another reason for this phenomenon is COVID because people were scared of passing through more locations and preferred to arrive at their destination directly and not risk getting sick. However, this is something that we are seeing less now. The trend shows that in 2023, there are more connection flights."
"The trend shows that in 2023, there are more connection flights."
Ziv Rosen
Another matter that we see is that the certainty in the travel industry is coming back, and there are more bookings in the winter for the summer months," explained Rosen. "During COVID, there was total uncertainty. In the last few years, the early bookings are more popular, and that started with the open skies agreements."
Can the prices be expected to sink in the future?
So are prices expected to keep rising? If we look at the coming year, the answer is yes.
According to Rosen, prices will probably continue to rise toward the summer, but in the long term, the situation will actually get better.
"In the next year, the number of passengers is expected to surpass that of 2019, but there will also be more flights than last year," he explained. "On the other hand, if your look from the perspective of the next few years, the prices in the industry are on a sinking trend. This trend actually started in Israel with the open skies agreements. The industry is always expanding, and competition is growing, and so the prices eventually go down too."