Air fares to remain steady in 2017

2 March 2017

Oil prices and the growth of Chinese carriers are among the global trends that will most impact air prices this year.

“Oil price, even though its starting to climb up a bit, is still relatively low, which encourages airlines to increase their capacity which has a lowering affect on the prices,” said Jeroen Hurkmans, vice president for Europe, Middle East, Africa and the Asia Pacific markets at Advito.

He also said Chinese carriers were “adding a lot of new routes to the mix”, affecting prices globally.

Speaking at the Business Travel Show in London, Hurkmans said international air fares globally were expected to remain steady, but that there would be regional variations.

Business class flights from North America are expected remain steady to most destinations, but increase 1% to Asia and Africa. Economy class flights on the other hand are expected to drop to most destinations, including to South America, the Middle East (both by 2%), Asia, Africa and the Pacific (all by 1%).

Flights from Europe are forecast to increase around 1% across the board, with the exception of economy class flights to South America (+2%), Africa (0%) and the Middle East (0%). “What we do see is that the secondary carriers are adding flights, so TAP Portugal and Finnair are adding routes to North America,” said Hurkmans. Local carriers were also expanding in Europe, said Hurkmans, with the legacy carriers trying to catch up.

In Asia, business class flights within the region are expected to increase 3%. Business class flights out of Asia are expected to drop by 1% to the Middle East, Africa and Europe, and increase 1% to the Pacific and the Americas. Economy class flights will drop by 1-2% to most destinations, with price decreases being helped by India relaxing its barriers to entry for carriers wanting to run international flights, said Hurkmans.

From South America economy flights to most destinations are expected to drop by 1-2%, remaining steady only to Asia. Business class flights from the region will be more mixed with flights to North America, the Pacific and Asia forecast to increase by 1%, while flights to Africa and Europe will drop 2%. 

Business flights within the Middle East are projected to increase 2%, while flights out of the region are expected to remain steady or fall, due to continuing expansion of the region’s players.

One of the most important trends in Africa are the difficulties low-cost airline Fastjet is having, said Hurkmans. “That gives more weight to the traditional carriers, so we can expect there a slight increase in the price of regional transport.” Economy flights to Australasia, Asia, the Middle East and South America are all expected to increase by 1%, with the other regions holding steady. Business class flights are expected to undergo a similar increase.

Flights from the Pacific are particularly mixed. Economy flights from the region to Asia and the Americas are expected to drop 1%, while flights to Europe, and Africa will go up 1%. Flights within the region are also expected to rise 1%, with business class flights within the region predicted to rise 3%.

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