Business airfares in the US and Canada are expected to fall next year while ticket prices in Europe and the Asia-Pacific will stay largely flat, according to the latest prediction by American Express Global Business travel.
But the annual forecast by the corporate travel manager warns business travellers using economy class to expect rising charges for extras as airlines try to boost revenue through ancillary fees.
Amex sees the shifting geopolitical landscape, overcapacity and fierce competition generally keeping a lid on fare growth after limited increases in 2016.
“The business travel outlook for next year looked to be similarly subdued with flat to moderate rate increases expected globally across air, hotel and ground transportation,’’ the forecast says.
While demand for global air travel remains at a record high, Amex predicts persistently low fuel prices and strong competition will help keep airline fares in check.
In North America, overcapacity is combining with fierce competition between legacy carriers and low-cost airlines on heavily travelled routes to produce fare decreases.
The forecast predicts US short-haul economy fares will fall by about 3 per cent while international business fares in the market will fall by about 1.5 per cent. Canada is expected to see a fall of 3.8 per cent on short hall economy flights and 3 per cent on long-haul business.
“However, lower fares will be offset by higher ancillary fees as airlines continue to look for new sources of revenue,’’ it says.
Flyers in Latin America will also see moderate falls in airfares with Argentina topping the short-haul economy table with a reduction of about 6.5 per cent followed by Brazil at 4 per cent.
The forecast expects European fares to stay level with 2016 as airlines face significant headwinds because of the lacklustre economy, security concerns, continued aggressive expansion by low-cost carriers and pressure from Gulf carrier.
Countries expected to see rises include Germany , up 3 per cent in short-haul economy and 1.5 per cent in international business, and Poland, up 4 per cent in economy and 3 per cent in business.
Fares in the UK are expected to fall 2 per cent on short-haul economy routes and 3 per cent in international business despite the impact of Brexit in devaluing the currency.
Business fares in the United Arab Emirates are expected to remain flat on international routes.
There will also be only limited growth in the Asia-pacific with Australian business fares showing no growth on international routes and just 0.3 per cent in short-haul economy and Singapore expecting a 1 per cent fall in business fares.
There is no growth expected for Japan and the massive China market should see a 1.5 per cent rise in short-haul economy fares and just 0.8 per cent international business despite surging demand. Business fare growth in another fast growing market, India, will also be small.
“Airfares will stay flat across much of the Asia-Pacific region, with slight increases depending on route and fare class,’’ the forecast says. “Despite high demand and relative political stability, overcapacity is keeping rates in check.’’