Air Monitor 2024: American Express Global Business Travel foresees stable airfares ahead

Thursday, December 7, 2023

The consulting team at American Express Global Business Travel (Amex GBT), the world’s leading B2B travel platform, forecasts that airfares are likely to stabilize across major routes worldwide in 2024. According to the Air Monitor 2024 report, marginal price increases and decreases are expected on regional and international business travel routes.

The global outlook for airfare fluctuations reveals mixed trends, with an overall expectation of increased price stability in 2024. In North America, minor changes in fares within the region (less than 1%) and to Europe (+0.3% business class, -2.5% economy) are anticipated. Airfares to Asia are projected to decline, while flights within Europe are expected to rise by around 1%. Declines in prices are projected between Europe and the Middle East (-3.5% business class, -2.8% economy) and South America (-3.9% business class, -10.4% economy). These comparisons are based on 2023 prices. For a detailed analysis at the national and regional levels, refer to the full report.

The forecasts take into account various influencing factors, including airline capacity, local inflation, foreign exchange rates, and fuel surcharges.

In the 2024 landscape, airlines reported record earnings in 2023 due to robust demand, high fares, and a drop in jet fuel prices. However, the surge in leisure travel, known as ‘revenge tourism,’ is expected to slow down in specific areas as consumer preferences are influenced by high interest rates. Rising oil and jet fuel prices since June 2023 are putting pressure on carriers and contributing to the overall cost burden.

Despite progress in rebuilding balance sheets in 2023, the aviation industry continues to grapple with substantial debt burdens. Increasing labor expenses globally, coupled with a talent scarcity in specific areas, pose challenges. Ongoing supply chain issues are expected to persist, potentially impacting new aircraft production and expansion plans.

Air Monitor 2024 provides guidance on airline negotiations and program strategies. Corporate discounts negotiated with airlines may face pressure as carriers prioritize yield management. The report suggests that the further adoption of New Distribution Capability (NDC) in 2024 could impact corporate travel programs as airlines’ pricing strategies evolve and become more dynamic.

Sustainability is expected to become a growing priority for corporations and travelers, leading to the integration of sustainability metrics in air sourcing. The report emphasizes the impact of shifting from air to rail where feasible on competitive routes, resulting in significant carbon emissions reductions.

Dan Beauchamp, Head of Consulting at Amex GBT, acknowledges the positive news of the expected softening of fare rises for customers. However, he notes that sourcing for corporate travel programs remains challenging, and the Air Monitor 2024 report serves as a valuable resource for gaining a better understanding of the factors influencing the air pricing landscape.

The forecasting methodology employed by Amex GBT involves the use of Prophet time series modeling, with data sourced from Amex GBT’s extensive data lake, International Air Transport Association (IATA) passenger data, and airline capacity data, including the number of seats and Available Seat Mile (ASM) data from Cirium Diio. Inflation and GDP forecasts from the International Monetary Fund (IMF) are incorporated into the predictive model, and prices are presented in local currency.

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