Whitepaper

The Rise of Crew Change Air Cost

Executive Summary

Air travel has become more efficient and affordable as a result of technological advancements, improved aircraft, and the rise of low-cost carriers. This has aided in the commercialization of airline products and the growth of the world’s air transportation industry.

External factors such as supply and demand, crude oil prices, exchange rates, and inflation, on the other hand, have a significant impact on the air travel industry, as evidenced by changes in air ticket prices.

1. Before the pandemic, there was a surplus of airline capacity, causing airlines to make lower booking classes more accessible to attract more customers.

2. During and after the pandemic, travel patterns shifted and airlines had limited data on passenger demand. To maintain revenue, airlines made lower booking classes less accessible, leading to an increase in air ticket prices.

Crude oil prices have also had an impact on the airline industry. For example, the Russian invasion of Ukraine increased crude oil prices, which were reflected in airline ticket taxes. Our investigation focused on the tax portion of airline tickets and how airlines respond to rising fuel prices with fuel surcharges.

Throughout this research, ATPI examines the cost of an airline ticket, including the ‘tax portion,’ in order to identify trends and patterns and to answer several questions, such as:

• How do airlines’ structure air ticket prices during a global crisis? 
• What are the air ticket price trends through time?
• Are there any changes to the tax cost? 
• How does crude oil price impact the total cost of an air ticket.

Research top 3 findings

1. Air ticket prices are stable over time

2. Air ticket cost increase has been primarily caused by a significant imbalance to air seat supply/demand equilibrium, as airlines made their lower classes less accessible

3. Air ticket taxes are directly tied to crude oil prices and any changes to crude oil prices will affect air ticket taxes

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