GLOBAL airfares are set to become more expensive in 2025 even as gains moderate, according to an American Express Global Business Travel Group (GBT) forecast, with ticket prices reflecting higher costs and lingering supply-chain disruptions.
The slower climb in ticket expenses is a levelling off from this year’s steep post-Covid increases, the global corporate travel manager said in its annual report on the cost of flying.
Fares on most routes will rise, though the size of the increases will likely vary greatly by region. North America and Europe are expected to see more “modest” increases of around 2 per cent while Asia and Australasia, among the last regions to unwind pandemic curbs, are set to see rises of close to 14 per cent.
While airlines are largely more bullish about demand in 2025, their near-term efforts to add capacity remain hampered by delays in both new Airbus and Boeing planes, as well as longer servicing of jet engines that prevent more aircraft from taking to the skies.
Increases in ticket prices next year are likely to more than erase any decreases before 2024, meaning some fares may return to post-pandemic highs, Bloomberg News calculations based on the Amex GBT data show.
The key drivers pushing up airfares include rising wages and staffing shortages, particularly with the ongoing labour disputes in North America and the cost of fuel amid ongoing geopolitical tensions, the report added. In addition, airlines continue to add new surcharges and low-cost carriers have invested in expensive extras such as airport lounges and better seats.
Routes between Europe and Asia will likely see a 6.6 per cent jump for economy travel and 8.2 per cent in business, driven largely by the higher costs associated with avoiding Russian airspace and curtailed supply, and as a number of European carriers pull out of China.
Australia is forecast to see the largest increases, especially for domestic travel. Qantas Airways and Virgin Australia are set to consolidate their effective duopoly in the market following the collapse of smaller carriers Rex and Bonza.
Despite global price rises levelling off, Gerardo Tejado, senior vice-president of professional services at Amex GBT, said that companies that rely on air travel will still be faced with a “new reality” and should expect “tough negotiating stances from airlines” as carriers seek to extract more revenue. BLOOMBERG
