Global political and economic uncertainty will contribute to a continued slowdown in business travel demand growth for air travel in 2020.
Fierce competition indicates that airlines will have minimal scope to raise fares despite rising costs for oil, labour and infrastructure, according to American Express Global Business Travel (GBT).
Fares will remain largely flat globally due to consolidation, competition, high regulatory costs and inefficient infrastructure – all of which has been a significant strain on profits, causing airlines to fold or merge.
Rates for flights in Europe will see only modest fare increases of 0.6% for economy and 0.7% for business class, GBT’s new Air Monitor 2020 report shows.
In the UK, business-class fares to Europe are expected to rise by 1.5% as carriers attempt to squeeze yield.
But economy prices could fall by more than 2% as Flybe’s tie up with Virgin Atlantic brings more competition on flights to European destinations.
Airlines in Europe are under pressure on a number of fronts, with concerns about over-capacity, strong competition, high regulatory costs and inefficient infrastructure.
The ‘flight-shame’ phenomenon has been most prevalent in Europe, driving increasing competition from rail routes.
Airlines, regulators and travellers are also taking a growing interest in sustainable travel.
Many of the world’s largest airlines have already introduced, or plan to introduce, carbon emission offsets or biofuel surcharges.
But governments, especially in Europe, have introduced proposals to raise taxes on aviation, while reducing tax rates for alternative modes of transportation.
GBT global business consulting vice president Joakim Johansson said: “While uncertainty looks to be a key theme in the coming year, we see several factors likely to affect buyers of business air travel in 2020, such as airline retailing strategies, growing fare segmentation and increased focus on sustainability.
“With a range of changeable elements impacting corporate air programmes, it is important for buyers to equip themselves with the best available insights, data and advice, to support successful outcomes for their organisations.”