Summary
- North America is predicted to see a decrease in international ticket prices, particularly within the economy class, on account of competition and the rise of low-cost carriers.
- Flights inside continents are on the rise, with Asia seeing the best increase at +3.0%, while South America is forecasted to have a major decrease in business class fares.
- Flights from Europe to South America are expected to drop by -10.4%, possibly on account of the high inflation environment in South America, making tickets cheaper for Europeans.
One of the vital essential metrics for economists inside the aviation industry to look at is the worldwide price index for flights. Taking a take a look at the common fare and the way it has modified over the previous 12 months can convey a solid amount of data concerning the state of the market.
Nevertheless, finding reliable data for this query will be difficult, as ticket prices vary, and finding an unbiased set of information will be tricky. Nonetheless, American Express Global Business Travel (Amex GBT), one among the leaders on this space, has recently released recent global price forecasts that may show the market’s direction, and provides a novel picture of how ticket prices might change in the following 12 months.
An outline of the forecasts
Amex GBT is a multinational corporate travel manager, with over 18,000 employees based out of offices across the globe. The corporate, which is led by Paul Abbott, handles an enormous portion of the globe’s corporate travel booking, and consequently, has an in-depth understanding of the market’s dynamics.
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When assembling their forecasts, Amex GBT dives into each international and domestic markets, and segments the info by business and economy-class offerings, with first-class fares being included within the business class category. Individually, the airline has predicted the share change in ticket prices for all six major regional air markets, including North America, South America, Europe, Asia, the Middle East, and Australia.
The numbers themselves
Crucial statistics for this piece come for North America, where the vast majority of international ticket prices are expected to fall. This data can best be realized through the table below, which shows Amex GBT’s expected percentage change in ticket prices between North America and other markets in each business and economy class:
Economy |
Business |
|
North America – Europe |
-2.5% |
+0.3% |
North America – Asia |
+0.2% |
-1.1% |
North America – South America |
-6.5% |
-3.6% |
Given the incredible rise in inflation in most economies, this number is fairly impressive and demonstrates the extent to which competition and network expansion have taken place inside the industry. Moreover, the continued rise of low-cost long-haul carriers has continued to place pressure on legacy airlines in these markets and continues to push numbers down.
Another fascinating numbers
Across the board, flights inside continents (including each domestic flights and connections between two cities inside the same continent) are steadily on the rise. In Asia, this number sits at +3.0%, in Europe it is simply +1.0% and in the USA, the number is even lower at just +0.3%.
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But there’s one market where this number is lower. In South America, the common business class fare is forecasted to diminish by -3.8%. With two major legacy conglomerates on the continent (Avianca Group and LATAM), networks are efficient, business travel is smoother than ever and business travel continues to expand rapidly. With such large networks, carriers can streamline costs and ultimately cut fares.
Photo: Vytautas Kielaitis | Shutterstock
Flights from Europe to South America are also expected to drop significantly. The typical economy class fare between the 2 continents is ready to drop by -10.4%, which might be an illustration of the high-inflation environment in South America, making tickets effectively far cheaper for Europeans to purchase.