Air Travel Costs to Rise By Up To 10% Next Year

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Rising oil prices and a strong global economy are expected to push up air travel costs next year, with hotel rates up 3.7 percent and fares expected to rise by 2.6 percent, although there are risks from a trade war, according to experts.

In countries such as Chile, India, Norway, New Zealand, and Germany, airfares are expected to increase by more than 7 percent, according to a Global Business Travel Association (GBTA) press release from last Tuesday.

According to Carlson Wagonlit Travel (CWT) VP Michael Valkevich, who is responsible for the Asia-Pacific region, the sector is coming to the end of a three to four year-period, during which the system had a lot of capacity and air travel costs, including airfare, dropped significantly. He finds they were lower than could reasonably be expected in terms of sustainability. Now, they’re getting back to normal.

The International Air Transport Association forecast passenger yields would rise by just over 3 percent this year. This is the first increase in 7 years, accounted for by a stronger global economy. Last year, both the CWT and the GBTA predicted a 3.5 percent rise in airfares this year.

Airline costs, including for labor and fuel, have been increasing steadily, leading air carriers to try to hike up fares in order to maintain margins.

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