Air fares are likely to stabilise across key routes around the world during 2024, accord to a new forecast.
The consulting team at American Express Global Business Travel (Amex GBT) expects marginal price rises and some falls on regional and international business travel routes.
Fare fluctuations reveal mixed trends but with a broad outlook of improved price stability in 2024.
North America is expected to see minor changes in fares within the region (less than 1%) and to Europe (+0.3% business class, -2.5% economy), while fares to Asia are projected to decline in 2024 over this year.
Flights within Europe are projected to rise by around 1%, with declines in prices between Europe and the Middle East (-3.5% business class, -2.8% economy) and South America (-3.9% business class, -10.4% economy).
The trends take account of a range of influencing factors, including airline capacity, local inflation, foreign exchange, and fuel surcharges.
Airlines reported record earnings in this year from robust demand, high fares and a drop in the price of jet fuel.
However, leisure travel, which boosted 2023 revenues thanks to ‘revenge tourism,’ is expected to slow down in specific areas as consumer preferences “fall prey” to high interest rates, Amex GBT said.
Simultaneously, rising oil and jet fuel prices since June 2023 are exerting pressure on carriers, and adding to the cost burden.
The Air Monitor report said: “Despite strides in rebuilding balance sheets through 2023, the aviation industry continues to grapple with substantial debt burdens. Increasing labour expenses worldwide are coupled with a scarcity of talent in specific areas.
“Ongoing supply chain issues are anticipated to persist, potentially delaying new aircraft production and impacting expansion plans.”
Negotiated corporate discounts are likely to come under pressure as airlines continue to prioritise yield management,’ Amex GBT warned.
“During 2024, further adoption of New Distribution Capability (NDC) could impact corporate travel programmes as airlines’ pricing strategies evolve and become increasingly dynamic.”
Meanwhile, sustainability is expected to be a growing priority for corporations and travellers, with the reported underscoring the impact of making “modal shift” from air to rail where feasible on competitive routes.
Amex GBT head of consulting Dan Beauchamp said: “While the expected softening of fare rises is good news for our customers, sourcing for corporate travel programmes remains a challenging environment.
“We are helping customers deploy smarter strategies as they navigate the changes and drive value for their organisations. Meanwhile, I believe the Air Monitor 2024 report is a useful industry resource for gaining better understanding of many factors influencing the air pricing landscape.”