3.7% rise in global airfares, 2.6% in hotel rates in 2019

Wednesday, July 25, 2018

 It has been predicted by the annual business travel forecast from Carlson Wagonlit Travel (CWT) and the Global Business Travel Association (GBTA) that the airfares will rise more than 7 percent in India, New Zealand, Norway, Germany and Chile.

The passenger yields as forecasted by the International Air Transport Association ( a proxy for airfares) will soar up to 3.2 percent in 2017 and this will be the first increase since 2011. The surge of cost in air travel in 2019 will be due to the strong global economy and rising oil prices.

The industry forecasts a 2.6 percent rise in airfares and 3.7 percent in hotel, however there might be risks from a trade war. Michael Valkevich, CWT’s vice president for global sales & program management, Asia Pacific said that for the Asia-Pacific region,  three to four years ago there was a lot of capacity in the system and fares were not as high. He thinks there was a bit more of renormalization of sustainable fares.

Last year CWT/ GBTA predicted a 3.5% rise in airfares and according to its 2019 forecast the rise in increased demand for air travel will simultaneously fuel demand for rooms. In Asia and Europe the room rates will be more than 5 Percent , 2.1 percent in North America and will fall by 1.3 percent in Latin America.

There were risks for the global economy in 2019 due to rise of protectionist policies, trade wars despite CWT/GBTA forecast. The U.S.- China trade war was not a factor for a drop in demand for business travel, however it was a ‘downside risk factor’ for the corporate travel industry.

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