Airfares look set to stabilize across key routes around the world during 2024, according to a new forecast from American Express Global Business Travel (Amex GBT), which predicts in its Air Monitor 2024 report that there will be marginal price rises on some regional and international business travel routes, but decreases on others.
Across all regions, airfare fluctuations reveal mixed trends – with a broad outlook of increased price stability in 2024, says the report.
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 airfares to Asia are projected to decline in 2024.
Flights within Europe are projected to rise 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).
All price movements are versus 2023 prices and take account of a range of influencing factors, including airline capacity, local inflation, foreign exchange, and fuel surcharges.
Other insights from Air Monitor 2024:
The 2024 landscape
Airlines reported record earnings in 2023 resulting 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. Simultaneously, rising oil and jet fuel prices since June 2023 are exerting pressure on carriers, and adding to the cost burden.
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.
Rates and retailing
Negotiated corporate discounts are likely to come under pressure as airlines continue to prioritize yield management. During 2024, further adoption of New Distribution Capability (NDC) could impact corporate travel programs as airlines’ pricing strategies evolve and become increasingly dynamic.
Environmental impact
Sustainability is expected to be a growing priority for corporations and travellers, urging swift integration of sustainability metrics in air sourcing. Air Monitor 2024 underscores the impact of making modal shift from air to rail where feasible on competitive routes. Customers are reporting significant carbon emissions reductions where their travellers are switching from train to plane.
Methodology
Amex GBT used Prophet time series modeling to generate the price forecasts in Air Monitor 2024. The data for the analysis came from Amex GBT data, IATA passenger data and airline capacity data including number of seats and Available Seat Mile (ASM) data from Cirium Diio. Inflation and GDP forecasts from the International Monetary Fund (IMF) are used in the predictive model.
The full Air Monitor 2024 report is available here.