North America and Europe are expected to see more “moderate” airfare increases of around 2%, while Asia and Australasia could experience hikes close to 14%, according to estimates from Amex GBT.
Airfares are projected to rise in 2025, even as airline profits stabilise, according to a forecast by American Express Global Business Travel Group Inc. The increases reflect higher costs and persistent supply chain disruptions. Most routes will see price hikes, though the scale will vary significantly by region. Asia and Australasia, which were among the last to ease pandemic restrictions, are expected to lead with the highest increases.
While airlines remain optimistic about demand in 2025, short-term efforts to expand capacity are hindered by delays in aircraft deliveries from Airbus SE and Boeing Co., as well as prolonged engine maintenance issues that are grounding aircraft.
Key factors driving price spikes
Price increases next year are likely to exceed any reductions seen before 2024, meaning some fares could return to post-pandemic highs, according to Bloomberg calculations based on Amex GBT data. Major factors contributing to rising fares include wage increases and staff shortages, especially due to ongoing labour disputes in North America, as well as high fuel costs driven by geopolitical tensions.
Airlines are also adding new surcharges, and low-cost carriers have invested in premium services such as airport lounges and upgraded seating, further driving costs.
Regional differences
Routes between Europe and Asia are expected to see price increases of 6.6% in economy class and 8.2% in business class. This is primarily due to higher costs associated with avoiding Russian airspace and limited supply, as some European carriers scale back operations in China.
Australia is forecast to experience the largest increases, particularly for domestic travel. Qantas Airways Ltd. and Virgin Australia are set to strengthen their duopoly in the market following the collapse of smaller carriers Rex and Bonza.
A challenging reality for businesses
Despite a levelling off of global price increases, Gerardo Tejado, Senior Vice President of Professional Services at Amex GBT, stated that companies relying on air travel will face a “new reality.” He warned they should expect “tough negotiating stances from airlines” as carriers seek to maximise revenue.
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Source: newmoney.gr
