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((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Updated with quotes on supply chain, context) by Joanna Plucinska
Demand for air travel has normalized after a multi-year boom following the COVID-19 pandemic as holidaymakers and travellers balk at paying higher fares, chief executives of major airlines said at the Farnborough Airshow on Monday.
Guliz Ozturk, chief executive of Turkish budget carrier Pegasus Airlines PGSUS.IS , said the airline expected yields – a measure of the average price paid per kilometer by each passenger – to be stable as customers return “to basics”.
Travelers are looking for the most cost-effective way to travel, she said.
“We’ve started to see demand normalize. What does that mean? I mean the demand is there, but now travelers are looking, like they were before the pandemic, for the most affordable, lowest, best price for their trip,” she said.
Air India Chief Executive Campbell Wilson said he expected the international market to slow over the next six months, while BA owner IAG ICAG.L Chief Executive Luis Gallego said business travel was still recovering from the COVID crisis, when travel came to a near standstill as borders closed and planes were grounded.
The comments come after Ryanair RYA.I earlier on Monday reported a bigger-than-expected drop in quarterly profit due to a 15% fall in fares, with management saying ticket prices continued to deteriorate.
Some European airlines reported weaker-than-expected first-quarter results, and their cost challenges are expected to impact second-quarter results. Lufthansa
LHAG.DE cut its profit target for the second time this year earlier this month.
Mr Gallego said demand remained strong for flights within Europe but yields were under pressure, which was reflected in Ryanair’s results.
SUPPLY CHAIN ​​CHALLENGES
Executives lamented delivery delays from planemakers Airbus AIR.PA and Boeing BA.N , as well as supply chain constraints.
The production slots of the two major manufacturers have been exhausted for many years, resulting in long waiting times for airlines looking to replace and expand their fleets.
For Pegasus, which has set out an ambitious growth trajectory but said it would not sign any aircraft orders at the airshow this week, Ozturk said better coordination and communication with Airbus about delays would help planning.
“Even a two- or three-week delay (for a July aircraft) is very significant for an airline, and (Airbus) has to overcome it in some way, by optimizing processes,” Ozturk said.
In India, the appetite for growth is such that Air India is stealing parts from its own planes to fly others.
“We have 30 planes on the ground for lack of spare parts,” Wilson said, adding that he expected the delays in aircraft deliveries to last “a good two years.”
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