Inflation’s impact on the air ambulance industry

Anyone who has made a trip to the grocery store recently is well aware of the impact inflation has had in the wake of the Covid-19 pandemic. But inflation didn’t stop at the grocery store: air ambulance providers around the world have seen their fixed costs rise significantly in every area of their business. “We did a trip to Mexico earlier this year and we paid about US$2,500 for landing, handling and customs fees, and ground ambulance transportation,” says David Fox, president of Fox Flight, an air ambulance company based in Toronto. “We recently did virtually the same flight to the same place and those costs were US$6,800 – without the ground ambulance included.”

Unavoidable expenses

Fuel can account for more than one third of all fixed costs, depending on where the provider operates. In the last 20 months prices for aviation fuel shot up from around US$3.50 a gallon in February of 2022 to a peak of around US$12.80 a gallon in the summer of 2022. Fuel prices have since drifted back down but still average at around US$6.00 a gallon and can vary widely depending on the airport.

“The peak for fuel in 2022 made it pretty much impossible for us to offset the fuel cost,” explains Tom Hienckes, Business Development Manager for Luxembourg-based European Air Ambulance. “It helps if you are flying newer aircraft, but the distance you have to travel to complete a mission is what it is regardless of the price of the fuel.”

Another fixed cost that has seen a dramatic increase is aircraft parts. Due to strict aviation regulations providers require a steady supply of parts for a range of aircraft, but supply chain issues have resulted in low inventories and inflated prices.

“We are a heavily regulated industry, and that’s a good thing,” says Mike Vallee, Vice President of business development for Clearwater, Florida-based Air Ambulance Worldwide. “But there are costs attached to that, and those costs have gone way up. For example, brake parts are up about 120 per cent; tires are up about 275 per cent – and that’s if you can find them.”

Add-on costs

Along with fuel and parts, providers have seen increases in a range of other areas as well. These include things such as airline tickets to reposition crews and expenses like hotels, food and ground transportation. Meanwhile, the cost of aviation and medical liability insurance, both essential for air ambulance operators, has shot up anywhere between 20 and 30 per cent year-on-year. At the same time, salaries for both pilots and medical staff have increased significantly as companies compete for fewer qualified workers. Then there’s ground ambulance transportation – “The cost of ground ambulances has basically doubled in Europe, but the price is the price wherever you happen to be flying; you have to pay it,” says Hienckes.

The new normal

Given the current environment, it is unlikely that air ambulance providers can expect to see cost reductions any time soon. In fact, it is more likely that providers, as well as their clients, will have to accept higher costs as the new reality. “In the post-pandemic environment, the industry clearly needs to reimagine how things get done, as well as what things like quality, service and competitive pricing means,” suggests Sergio Abril, an air ambulance industry veteran and EURAMI board member. “For a responsible operator, the cheapest way is not always the safest, most professional option for the client.”