Rise in ticket prices hampers tourism recovery, says economist

When compared to last year, the prices of air tickets for the Easter and Tiradentes holidays reached an increase of up to 270%. In the assessment of the economist of the National Confederation of Trade in Goods, Services and Tourism (CNC) Fabio Bentes, the increases make the recovery of tourism even more difficult.

In an interview with CNN this Thursday (14), he said that the sector has lost R$ 496 billion since the beginning of the pandemic, which represents about 10 months of revenue. “At a time when the pandemic gives a truce, we are faced with this cost inflation that scares away the consumer and makes the recovery of the tourism sector in 2022 more painful”, he said.

Bentes considered that even in the face of the difficulties faced by commerce and industry, “no sector lost as much from the pandemic as tourism”.

The economist cited less competition between airlines and the increase in aviation costs, such as fuel prices, to explain the more expensive tickets, and considered that “at some point, demand will react and prices will stop rising, but this will still take a while.”

He recalled that the price of jet fuel has risen 80% in recent months, and said that “this creates a problem for airlines when it comes to setting ticket prices.”

“Whenever the price of jet fuel goes up by about 10%, the price of air tickets goes up by an average of 2.1%. When we talk about an increase of 80%, there will be a readjustment for the consumer of approximately 20% to 30% over the months”, he explained.

In order for travel costs to return to normality, Bentes assessed that it is necessary for “the oil price to stabilize, albeit at a slightly high level, and that this movement of high interest rates that the Central Bank has been making to contain soaring prices definitely start to have an effect”.

“We are subject to the law of supply and demand, the prices practiced in the air transport market are free prices, and with that this law of supply and damnda often takes the price out of place”, he said.

The economist also recalled that airline tickets are often consumed with payment in installments, and that “with higher interest rates, it is even more difficult to demand and buy tickets. Therefore, demand is starting to hold back this rise in prices a little, but that will still take time”.

Source: CNN Brasil

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