Why are international flights so much more expensive this year (2022)?

This is probably not very relevant for Georgia, but: In addition to the other problems already mentioned, many flights between Europe and East or Central Asia have actually become much longer after Russian airspace has been closed for most airlines. For illustration, let’s take a look at Rand’s 1958 image about then potential routes as the Soviet Union was opening up its airspace — these, of course, are busy routes today and the image is just as relevant for Russia:

Also a current flight has a note: Actual: 11,895 km (Direct: 9,379 km) — some 25% longer.

This does not just affect all airlines from countries that have sanctioned Russia, but also flights that are operated by planes that are leased from western plane leasing companies (related to Russia being about to turn some 400 planes owned by such companies into total losses). Even if the airlines operating such planes are based in countries that are entirely trying to keep out of this conflict. Leasing planes has become very popular in the industry, and there are a many airlines which rely exclusively on leased planes.

Longer flight times mean higher fuel consumption and other operating costs, which makes flying on such connections more expensive.

I originally started writing this as a comment to Ross Millikan’s answer but it has swollen to more than three comments and I wanted to write on Harper’s too so now it is a standalone answer significantly upgraded.

Let’s take a look at the 2014 prediction Boeing presented at the time. We will see most of the problems it has does not stem from the pandemic — but it has problems across the entire range.

From top to bottom:

1. The 747-8 program was doomed from approximately 2017. In 2018, 2019, 2020 not a single passenger 747-8 was delivered. Four engine planes are just not competitive enough — the Airbus A380 is also dead. The program was cancelled in 2020 and one plane was delivered in 2021. The freighter version fared slightly better but 6-7 orders a year couldn’t sustain the program.
2. The 777X in 2012 was intended to enter into service in 2019. Usual delays, the pandemic and the increased scrutiny brought on Boeing thanks to the 737 MAX killing hundreds of people have pushed this to 2025.
3. 787 deliveries are on pause because of the aforementioned scrutiny. And once the deliveries resume, the FAA will certify each plane, likely slowing it down. https://www.seattletimes.com/business/boeing-aerospace/when-boeing-787-deliveries-resume-faa-will-certify-each-plane-itself/
4. Note the gap between the 737 and the 767. That’s where the 757 was but Boeing didn’t want to talk about that because they stopped making it in 2004 and Boeing didn’t have a replacement then and still has nothing. There were studies for a 737-757 replacement codenamed Yellowstone Y1 (source) but that got canned when the 737 MAX was introduced in late 2011. And the 737 MAX is not a great replacement neither is the A321neo despite the latter is often used in its place but either the seating capacity or the range is not a great fit for the routes the various 757 models worked. The A321XLR would often be better — but that just slipped from late 2023 to early 2024. The MAX 10 intends to compete with the A321XLR but the timeline for that is not clear at all but it is unlikely it’ll beat the A321XLR. The new mid-market airplane as Boeing calls it is not even a concept yet and even starting the program just had been put on hold for years. At the top of the gap, the 767 is still produced although the double stretched 767-400ER is not.
5. Do I need to say anything about the 737 MAX? It was grounded for a long time and the building of it was scaled down and it’s very hard to scale back up.

So across the entire range Boeing now has serious problems of delivering modern airplanes to its customers. Let’s look at the latest report of orders and deliveries

For 2022, Forecast International’s analysts currently expect Boeing and Airbus to deliver 455 and 702 commercial jets, respectively. Compared to the 2021 level, this is a 33.8 percent increase for Boeing and a 14.9 percent increase for Airbus.

Let’s take a look at the last similar expectation before it came to light the 737 MAX is a deathtrap https://dsm.forecastinternational.com/wordpress/2019/01/15/airbus-and-boeing-report-december-and-full-year-2018-commercial-aircraft-orders-and-deliveries/:

For 2019, Forecast International’s analysts expect Boeing and Airbus to deliver 870 and 862 large commercial jets, respectively.

So the industry had a capacity of 1732 planes before the pandemic hit but it is only expected to make 1157 this year. That’s a lot of planes missing, one third less and at a time when the demand is higher because of the retired older planes — and most of it is missing on the Boeing side, it’s delivering only half what it used to just four years ago.

Also, the drought is worse on the top end. The 787 is on pause, the 777X is delayed, the 747-8 and the A380 are no longer produced. This means the long range flights using a widebody have a much smaller supply. And if supply is low? yeah that drives prices up and these routes were already the most expensive ones so even if the relative price increase were the same, the absolute numbers are much higher. And it’s likely the relative price increase is actually higher due to this shortage. The only way to ease this is to bring back old planes, for example Lufthansa restarted the A340-600 on a few routes — but someone will need to pay for the increased maintenance costs and fuel inefficiencies of those birds…

I think the situation will only dramatically improve in 2025 when on one end of the market, the 777X finally enters service and on the other, the new Airbus A320 final assembly facility in Mobile, Alabama starts producing. Until then, there are simply not enough planes.

In addition to the other answers, one of the outcomes of the 737MAX problem was an examination of many things at Boeing. They have not delivered a new 787 for two years as a result, but are hoping to restart soon. That has left airlines with fewer planes than planned so seats are scarcer.

Nobody has mentioned inflation yet. This topic seems to be a collective blind spot for the average person.

Of all the US dollars printed in the last 200 years, 60% of them were printed in the last 2. There is a big lag between the Fed printing money and prices ballooning, but the result is inevitable. For example, if the money supply is multiplied by 100x (as it has over the last 100 years), eventually the price of everything denominated in that Fiat currency will multiply by 100x (which is exactly what happened).

Article from the NASDAQ stock exchange: https://www.nasdaq.com/articles/money-printing-and-inflation%3A-covid-cryptocurrencies-and-more

Hilmar’s answer covers supply and demand but there’s one more thing going on here. As he says " the airlines will charge whatever they think they can get away with." — of course they do but they are also under quite a bit of pressure to do so because the last two lean years depleted cash reserves, made new loans necessary and so forth. So the free market forces which should drive down the price are severely tampened.

In addition to other answers…

There are also fewer airplanes today, so fewer seats.

And airlines are a very "supply and demand" business, so normal demand with fewer seats to sell will cause prices to go up.

Why fewer airplanes? In March 2020 when the world stopped, it was crunch time for airlines. Normally when you store an airplane, you fly it to a place where environmental conditions favor preservation – Mojave Airport, Pinal Airpark, Kingman, Tureul, APAS, etc. Of course these locations instantly filled up and airlines all over the world were forced to park airplanes "any which where they can" (that can take a widebody), and you famously saw popular airports with whole runways closed and used for airplane parking. This had 2 problems.

• Parking fees at such airports are quite high.
• Maintenance increased, because weather at these airports was less favorable to storage than the preferred Mojave, APAS etc.

Keep in mind you don’t just park an airplane and forget it for a year, unless you want to do a very costly and laborious systems check when it returns to service. So the planes need to be regularly maintained, serviced and exercised. It’s really best to keep a plug-in HVAC pack on it (I bet some airports were scrambling to get more electricity out to ramps for that)… and run up the engines from time to time. Being parked does not pause the countless periodic maintenance items.

So airlines accelerated retirement of older planes

These parking and maintenance costs are terrifying to airlines trying to figure out how to avoid bankruptcy.

As such, airlines were in a big rush to sell the "tail end" of their fleet – planes that were going to come out of service in the next 2-10 years anyway due to normal replacement cycles. They already had orders into Boeing and Airbus for those planes’ replacements.

Selling the plane means somebody else pays storage and somebody else pays maintenance (or not, and made it a "parts picker").

The "pickers" are being flown to those "fair weather" boneyard airports like Mojave and Pimal who tolerate "Pick Your Part" operations on their ramp… (unlike DeGaulle or Detroit Metro who definitely don’t). That in turn forced "runners" to poorer-weather airports and increased their maintenance and parking costs.

However, new plane construction can’t be accelerated much

It would be grand if Boeing and Airbus could just "turn production to 11" or "throw three shifts on" and rapidly replace those early-retired jetliners now that we need them. But the business doesn’t work that way. Lead times are quite long and inertia is very high.

Also, we’re in the middle of a supply chain nightmare generally, two very large Eastern European technology producers are in the middle of a war, and oh – speaking of that, the Antonov-225 super-transporter, which sometimes pinch-hit to move airplane parts, was wrecked.

So supply, which will take years to recover, is simply far out of sync with demand, which has been wildly whip-sawing all over the place as we alternate from "done with COVID, let’s get out again" and "Oh wait, COVID came back for some reason". As someone with a side business in tourism, I can say we’ve actually been doing this all along. Just now, it seems new. It seemed new everytime.

Airline prices are based on supply and demand. Airlines have reduced staff & supply a lot during Covid and currently demand is increasing rather quickly. As long as there are passengers willing to pay, the airlines will charge whatever they think they can get away with.

Hopefully the airlines will ramp up supply as well, but at the moment this is a good situation for them: Operating fewer flights at high margins is much more profitable and operating more flights at a lower margin.

One could argue that the "free market" should eventually level this out, but it’s not entirely clear how much "free market" is in play here. For example when the big US carriers (United, American, Delta) massively de-valued their frequent flyer programs, they all 3 did it pretty much the same way and at the same time. Coincidence ?

Saw a feature on TV yesterday. They claimed there were two main reasons:

a) a lot of people travelling these days – almost the same number as before Covid, while airlines still offer reduced flights / seats

b) airlines charging more to make up for their losses those last two years.

They also "discussed" the increase due to increased prices for fuel, but found this to have a minor impact as airlines buy kerosine well ahead.

Link to the feature (in German): https://www.ardmediathek.de/video/plusminus/flugpreise-wie-teuer-der-urlaub-2022-wird/das-erste/Y3JpZDovL2Rhc2Vyc3RlLmRlL3BsdXNtaW51cy82MzFlYzQzYy0wODg2LTRkYzctYmQ4OC02MDUyMDQyYjI1NzM (available until June 2023 according to the website)