Bogotá — Airline ticket costs have been impacted in Latin America and the Caribbean amid the depreciation of some of the region’s local currencies since 2022 and, mainly, by the increase in jet fuel prices.
While last month the average price of jet fuel was 31% below the July 2022 average, compared to the same period in 2021 it was 27% higher, according to a report by the Latin American and Caribbean Air Transport Association (Alta).
Meanwhile, the average price of WTI crude oil was 3% above 2021 levels.
In fact, throughout July the price of jet fuel had a slight increase compared to the average price in June ($94.50 per barrel).
In July it hit a high of $108.70, after having dropped in June to $90.80 per barrel.
This means that “the differential between the price of a barrel of oil and jet fuel continues to be high”, according to the report.
In July 2021, the price of jet fuel was 11% higher than that of oil, but last month this gap widened and the differential was 35%.
Jet fuel represents about 30% of airlines’ cost structure, and which is 60% in US dollars on average.
The dynamics of jet fuel prices have a direct impact on air ticket costs, which is aggravated in an inflationary environment.
Despite this, demand is recovering and the Latin American airline industry is showing itself to be resilient to the crisis generated after the pandemic of higher interest rates and the lack of capital injection in segments such as low-cost, which led to the ceasing of operations by two airlines in Colombia.
The region has once again led the world ranking in air passenger traffic recovery, according to Alta.
A total of 29.2 million passengers traveled in Latin America and the Caribbean in June alone, an increase of 1.8% over pre-pandemic levels, thanks to the dynamics of the domestic market.
However, international passenger traffic within the region is the slowest recovering segment, as it was 8.1% below its 2019 levels.
According to Alta, 177.9 million passengers were carried in the January-June period, 0.3% below 2019 numbers.
In June, Colombia boosted international passenger traffic regionally with an additional 483,000 passengers, a 40% growth compared to the 2019 record.
Mexico also stood out that month, as it saw 12% growth in international passenger numbers.