Cash-strapped airlines’ mounting debt levels will lead to a rise in air fares and greater government involvement in the sector, according to research by McKinsey & Co.
Airlines are likely to increase ticket prices by about 3 per cent as they take measures to repay debt amassed during the Covid-19 crisis, assuming a 10-year repayment window for only the additional debt taken on during the pandemic, McKinsey said in a report on Friday.
Travellers can expect higher fares when demand for air travel returns as it will likely outpace capacity initially.
“We see a glut of latent demand of people eager to travel. It will take time for airlines…