Flight prices are expected to be higher than usual during the upcoming high holidays

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by Ifi Reporter Category:Financial Sep 4, 2022

Flight prices in the world and in Israel during the upcoming holidays are expected to be higher than usual. The demand for flights after the exit from the period of the corona closures encountered many challenges, including the energy crisis created by the war in Ukraine and a shortage of personnel in the aviation industry.
The price of jet fuel - which is usually about a quarter of the airlines' total operating costs - is skyrocketing. The increase in its price this year is twice as high as the increase in the price of crude oil - which reflects the huge demand for flights.

Following Russia's decision to stop the supply of natural gas to Europe, European countries began to use alternatives, such as diesel that can be used for heating, industry and electricity production. As a result, there is a shortage of jet fuel - which is made from the same type of oil - just as demand is rising.
In Israel, the increase in flight ticket prices already started last summer, due to great demand. The travel agents calculated that this is an increase in the price of up to 50% per ticket, compared to the prices before the corona crisis. The abnormal increase in prices affected not only those who book well in advance, but also the bargain hunters - consumers who waited until the last minute to find an attractive price for flights and vacation packages, and discovered that it is very difficult to find such a price.
Last summer, prices for nearby destinations such as the Greek islands and Cyprus amounted to $400-700, and the prices of flights to Europe and the USA broke records. Flights to London cost $1,200, and flights to New York cost $3,000 - and even more. "I've been in the field for 25 years, and I've never I have seen such prices. As soon as the supply is low, there are fewer deals and fewer opportunities," Ronen Carso, VP of Ista Lines, said at the time.
Similar to the world, the prices were explained by the lack of manpower and the energy crisis affected the prices. In the meantime, the Airports Authority (Rashat) began to limit the number of slots - time windows for takeoffs and landings - and a very limited supply of flights was created, which skyrocketed prices.
However, in the first three weeks of September, prices are more favorable, due to a drop in demand, and you can find special offers for many destinations. Thus, you can purchase a plane ticket to destinations such as Cyprus, the Greek Islands, Brussels and Venice for less than $250.
Prices are expected to jump again on Rosh Hashanah. According to estimates by the Airports Authority, with the beginning of the Tishrei holidays, an average of 80,000 passengers per day are expected to pass through the airport, and in the months of September and October, over 4 million passengers will pass through the airport.
Diesel stocks in the world are extremely low, which is expected to cause a shortage of jet fuel. The jump in the price of jet fuel is notable in Europe, where the energy crisis is most acute. Gasoline prices have risen this year in Europe by about 56%, a little more than in Asia and the US. For comparison, Brent crude oil, which is used as a benchmark for oil prices in the world, has risen by about 28% this year.
Financial services company Fitch Solutions last month raised its forecast for global jet fuel prices, and now expects them to average $141 per barrel this year. This is compared to Brent oil, which is currently trading at $94 per barrel. According to Fitch, strong demand for diesel will continue to reduce jet fuel output.
Airlines are also struggling to cope with the surge in demand for flights after a prolonged period of closures during the Corona virus. A lack of manpower, both among the ground crews at the airports and among the air crews led to flight cancellations, huge check-in queues and extremely high ticket prices.
Global seat capacity - the number of seats offered by airlines - is currently 14% below its 2019 level, according to OAG, a research firm focused on the airline industry. "We anticipate that an increase in travel demand for the upcoming holidays and higher gas prices will increase flight prices in November and December," said Haley Berg, chief economist at Hopper, an American flight booking company. "Airline ticket prices may be about 20% higher than their level in 2019."

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