EU opens investigation into increasing airfares

The European Union has opened an investigation into a recent surge in airfares across Europe, following airlines' decision to hike prices by up to 30 percent during the summer, leading to sizable profits.

According to data released by the EU last month, average airfares across Europe this summer were 20 to 30 percent higher than in 2019.

In an interview with the Financial Times newspaper, EU transport commissioner Adina Valean said officials were "looking into detail … of what is exactly going on in the market and why".

While the European Commission lacks the power to control airfares, Valean's involvement escalates pressure on airlines over the price hikes, which have been spurred by travel demand and supply-chain complications.

The commission is looking for clarification from airlines regarding fare increases and connectivity within the bloc, and is seeking a deeper understanding of the industry dynamics driving the price increases, Valean said.

"We are still investigating because we don't have a full, detailed explanation," she said.

The EU is concerned that higher airfares could affect the EU's more remote regions that depend on air travel for links to the rest of the bloc.

"We cannot go as a regulator into micromanagement of prices or imposing that, I don't think this is doable or desirable," Valean said. "On the other hand, what I, as a regulator, worry (about) is that a price (could) become a barrier for connectivity."

Under EU laws, airlines are allowed to determine their fares.

This year, a rise in demand for flights coupled with a shortage of aircraft has driven up ticket prices, according to the FT. Some airlines retired planes during the COVID-19 pandemic, while supply-chain issues affected deliveries, and inflationary pressures on fuel and labor further escalated costs.

The International Air Transport Association has forecast profits will double this year due to surging post-pandemic travel demand.

But Valean expressed concern that higher prices might persist due to the mismatch between travel demand and the limited supply of new aircraft.