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​Why airfares are forecast to increase despite a softening global economy

Blog post   •   Jan 15, 2019 08:52 GMT

Average ticket price (ATP) for air is forecast to increase by 2% globally in February, despite what many economists predict will be a softer global economy heading into 2019. Between anxiety over trade wars, a chaotic Brexit negotiation, and jittery markets, the global economy is expected to decelerate, but, the key is, it will remain above trend, which is helping to shield prices.

The same is true for travel growth, according to IATA, which it expects will slow in 2019, while remaining above the 20-year trend. IATA predicts the global commercial airline industry will head into its 10th consecutive year of profitability in 2019.

In the second edition of CWT Solutions Group’s bi-monthly  air trends report, we continue to feature global predictions for air in four categories, backed by data and predictive analytics, and lay out the conditions affecting prices and usage.

Average Ticket Price

Outside of what’s going on in the global economy, the main airline alliances’ commercial strategy of expanding their branded/bundled fare offerings to their entire network, coupled with the continued rise of ancillary fees, are helping to keep prices up.

Economy class usage

Economy cabin usage is expected to remain flat through February.  CWT Solutions Group predicts 92.4% and 92.6% of total tickets will be used in the economy class the first two months of the year.

While there is no major policy change in the cabin rule on the horizon, CWT Solutions Group has observed a growing trend among organizations moving away from a trip duration policy to one that’s more traveler-centric. This takes into account the reason for the travel, travel frequency and a traveler’s well-being when selecting a cabin or considering a bump up to premium economy or business class. Whether this will impact economy class usage in 2019 remains to be seen.

Advance booking usage

Advance booking usage is expected to rise to 41% in January and 40% in February, up from 35.9% in December. The increase can be credited to the passing of the hectic holiday season that resulted in a higher percentage of late bookings.

Online booking tools usage

For the first time, online booking tools (OBTs) usage worldwide is projected to reach half of all tickets booked as soon as February 2019, up from 47.5% in December. Digitization efforts by the main OBT providers, including mobile apps, are bearing fruit. Companies and suppliers are chipping in by providing more content via corporate OBTs. As user experience improves, so does adoption.

Read our bi-monthly air trends report here.

Subscribe to our upcoming bi-monthly air trends report. 

Blog author: Christophe Renard, Vice President, Solutions Group, Carlson Wagonlit Travel 

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