Global airfares set to rise in 2025: Report indicates economy ticket prices to rise by...

Global airfares are projected to increase in 2025, driven by higher costs and ongoing supply chain disruptions, according to a forecast by American Express Global Business Travel Group Inc. In its annual report, the global corporate travel manager noted that while ticket prices are expected to rise, the pace of these increases is moderating after a substantial surge following the COVID-19 pandemic, Bloomberg News reported.

The report highlights that fare hikes will vary significantly by region. North America and Europe are anticipated to experience modest increases of around 2%, while Asia and Australasia, which have only recently lifted pandemic-related restrictions, could see rises approaching 14%. 

Airlines are optimistic about demand in 2025; however, capacity expansion efforts are constrained by delays in the delivery of new aircraft from Airbus SE and Boeing Co., as well as extended servicing times for jet engines. These factors are preventing more aircraft from entering service.

Amidst forecasts of increasing ticket prices, Bloomberg News calculations based on Amex GBT's data indicate that fares may rebound to post-pandemic highs, effectively erasing any decreases observed before 2024.

Key factors contributing to the rising costs include

• escalating wages
• staffing shortages exacerbated by labour disputes in North America
• high fuel prices influenced by geopolitical tensions.

Additionally, airlines are implementing new surcharges, and low-cost carriers are investing in enhanced amenities such as airport lounges and upgraded seating.

The expected fare increase on routes between Europe and Asia is particularly notable, with economy tickets projected to rise by 6.6% and business fares by 8.2%. These increases are largely attributed to heightened costs from avoiding Russian airspace and reduced supply, as several European carriers withdraw from the Chinese market.

Australia is set for significant fare hikes, especially for domestic travel. The market is set to see Qantas Airways Ltd. and Virgin Australia strengthen their effective duopoly following the exit of smaller competitors Rex and Bonza.

Despite the expected moderation in global airfare increases, Gerardo Tejado, senior vice president of professional services at Amex GBT, warned that companies reliant on air travel must brace for a "new reality," anticipating "tough negotiating stances from airlines" eager to boost revenue.