Airfares could get a lot more expensive in 2022, warns Virgin Atlantic CEO
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According to Virgin Atlantic CEO Shai Weiss, the price of flights will increase sharply this year as the airline industry deals with rising work costs, supply chain shortages and the price of being more eco-friendly. Not to mention the need to claw back profit after a crippling two years of losses due to the COVID-19 pandemic.
“Inflationary costs, and containing them, is a major risk not just for an airline but to everyone in the industry right now,” said Weiss on 18 December when he appeared at a Bloomberg event analysing the year ahead. “I’m assuming we will need to pass some of it on in the form of prices — all of us need to become more efficient.”
Under Weiss – who took a 20% salary cut during the worst of the pandemic – Virgin Atlantic reduced its costs base by more than £290m and laid off 45% of its employees. For a short time, it even looked as though the iconic brand might have shaken its last mid-air Martini, but in late 2020 they managed to secure a £1.2bn rescue deal.
Increasing labour costs are another reason why airfares will soar, according to Weiss, who mentioned the need to remain agile in an increasingly competitive jobs sector, and pointed out that a record 4.5 million Americans quit their jobs in November 2021 (“That gives you the scale of the issue – it’s not going to go away in the next few months”).
The airline’s head honcho since 2014, Weiss was also asked how he could deliver on the aviation’s industry’s pledge to be more sustainable. He claimed that Virgin Atlantic had done its bit so far thanks to the Airbus A330neos which will join the fleet this year:
“They are 30-40 percent more efficient than the Boeing 747s and A340s that we have,” he said. “Overall, they would lead to a 30 percent reduction in fuel by 2030.”
Naturally, the CEO was keen to stress that these eco-conscious strides would also eventually have financial knock-on effects for passengers too, warning that sustainable fuel (currently three-to-five times pricier than conventional fuel) would “come at a price” for everybody: “It’s not just the airlines that will have to foot the bill to fly on more sustainable fuel. It’s going to be shared by all stakeholders.”
For now, at least, the hope is that longer prices in the short term will help the carrier get back to its best. “We’ve gone further than any other airline to ensure we’re fit for purpose for the future, and future volatility,” added Weiss.
With a severely disrupted market still groggily getting back on its feet, as well as so many other major carriers facing the same challenges as Virgin Atlantic, expect prices to be raised across the board as the year progresses.
Now, how about diving back into those January flight sales? Turns out they might save you a lot more than you bargained for…
Featured image by Tom Dalt
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