Follow the Money: What's driving up the cost of flying?

**Hannah Mullane** (0:00)
We're in peak holiday season, certainly for the Northern Hemisphere at the moment, and that means more planes in the sky.
I'm here at Manchester Airport in the north of England, and nearly three and a half million people will travel through here this month, jetting off on summer breaks. And for many, it's costing more than they might have thought. I do think the prices are going up.

**SPEAKER_2** (0:21)
They are, definitely. I'm not too happy at paying about 100 quid for a suitcase.

**SPEAKER_3** (0:26)
It does feel a lot.

**SPEAKER_2** (0:27)
Yeah, it does. It does feel a lot.
They plague you with, do you want this, do you want that, do you want this?

**SPEAKER_3** (0:32)
We normally just take hand luggage.

**Hannah Mullane** (0:35)
Today on Business Daily with me, Hannah Mullane, we'll be following the money to work out why the cost of flying is going up, what airlines are doing to protect their profits, and what it could mean for our future holidays.
Everyone loves a holiday, a vacation, a break away from everyday life, a chance to get away and explore a new place. And that often involves getting on a plane, and that is getting much more expensive. You'll see it in the ticket prices if you've tried to book a flight recently, and it's in the data too. Some flights increasing by as much as 25% compared to last year. If you have a look at the US. Consumer Price Index data.
And there are lots of reasons for it too. Jet fuel costs spiking, high demand for travel, and increased labor costs all playing their part. But that increased cost isn't all down to the airlines. We start our program taking a step back to where most holidays start, at the airport. Berlin Airport, to be precise.

**Aletta von Massenbach** (1:36)
It's about inflation and wages and energy cost, cost of construction.

**Hannah Mullane** (1:43)
A letter from Massenbach is the CEO of Berlin Airport. It opened in 2020, eight years later than planned, racking up extra costs into the billions of dollars. And during a global pandemic.
Airports recouped those costs by charging airlines landing fees and a reported rise in landing fees at Berlin Brandenburg next year has led to some low cost carriers cutting flights to and from the airport.

**Aletta von Massenbach** (2:05)
There are certain budget airlines that have reduced capacity at Berlin Airport. Others have increased that. But what we see from the ones who have decreased, this is mainly because of the state induced costs. So that these are regulatory costs, have nothing to do with the airport.
It is the German state that, through taxation and other costs, increase the overall burden to an airline and therefore decrease competitiveness.

**Hannah Mullane** (2:37)
So the Ryanair boss, Michael O'Leary, he described Germany as one of Europe's least competitive aviation markets. He was talking about those state level costs that you just said there. What are your thoughts on that? Would you agree with him?

**Aletta von Massenbach** (2:50)
We don't agree with him in every each and every aspect that he says, but in this specific aspect, we have exactly the same position as German aviation sector. We fully agree with his assessment and we see how much this decreases competitiveness, and by decreasing competitiveness, you also reduce connectivity. And this is to the detriment, not only to of the airport, but it's also a macroeconomic effect. It has to the people living here, to the businesses, to the industries, to everyone who needs connectivity. You know, for an airline to operate at a German airport, it's more expensive than operating, for example, in an airport in Spain or in Italy, Poland or whatever other comparison you want to make.

**Hannah Mullane** (3:42)
And we see airlines, they have lots of added extras now that they can use to boost their profits, like for baggage and seats that you choose and things like that. But airports have extras as well. How much is that important to you in terms of the added extras that you can charge as an airport?

**Aletta von Massenbach** (4:02)
So this is something that we obviously also try to do in order, again, to keep our airport charges flat. It represents more than 30% of the revenue that we generate at an airport.

**Hannah Mullane** (4:15)
And then there's also things like fast-track security that people can pay for, sort of priority services within the airport.

**Aletta von Massenbach** (4:22)
Does that also play into it? That's also a very important new trend because we see that lots of people are seeking certain exclusivity and this we see especially when it comes to lounges. So we are expanding our capacities and the offers at the lounges as well. And you have, again, even within the users of lounges, you have different expectation requirements and also willingness to spend money for it. And so you need to have a differentiated product.