Published on : Thursday, July 20, 2017
Airfares in Singapore are expected to rise by 3.9 per cent by 2018, outpacing the region. Hotel prices are also projected to see a 3.2 per cent increase as the hotel industry picks up pace. In comparison, Asia-Pacific airfares are expected to grow at a slower 2.8 per cent in 2018, and regional hotel prices are expected to see a rise of 3.5 per cent, fuelled by higher demand from strong local economies such as China and India. Costlier fuel, fare segmentation and new long haul routes are possible factors behind the increase in airfares next year.
Richard Johnson, director at CWT Solutions Group (Asia-Pacific) said, “Oil prices are expected to rise in 2018 and could directly impact airlines’ fuel costs. Fuel typically makes up a sizeable portion of operating costs for airlines, and fuel price volatility will be a factor in ticket price increases. However, airlines that lock in fuel hedges at lower prices may be able to mitigate some of that volatility. Segmentation of fares is becoming more prevalent, and this allows airlines to grow their revenue through the ancillary portions of the ticket cost. We already see this in Singapore for airlines such as AirAsia and Scoot.”
Strong travel demand from emerging markets and increasingly from second- and third-tier cities is also likely to keep airfares upbeat, according to Katrina Leung, executive director of trade show organizer Messe Berlin. Where the meetings, incentive Travel, conventions and exhibitions (MICE) industry is concerned, Singapore is seen as an attractive destination, thanks to its infrastructure, transportation network and safe environment.
“Singapore is an established, high volume market for hotels in terms of demand,” Mr. Johnson added. “With mergers taking place between hotel groups, consolidation will likely lead to a decrease in competitive price options typically seen in more fragmented markets, and therefore contribute to hotel price increases in the market.”
The Global Travel Forecast report estimates that worldwide, airfares are expected to cost 3.5 per cent more next year, even as airlines add 6 per cent in fresh capacity, owing to higher crude oil prices. Meanwhile, global hotel prices are expected to increase 3.7 per cent on average in 2018, although actual performance will vary market by market.
The report highlighted that disruptive technologies such as artificial intelligence, blockchain and chatbots are likely to impact the travel industry going forward.