New research identifies six hot spots — India, China, Colombia, Mexico, Singapore and Australia — where rising business travel demand is driving notable air fare increases. These findings come from the 2016 Global Travel Price Outlook, a study produced by the GBTA Foundation, the research arm of the Global Business Travel Association, together with travel management firm Carlson Wagonlit Travel. They show that while global air travel prices look set to be essentially flat in 2016, specific markets are seeing upward pressure on fares.
“Business travel is a leading indicator of global economic activity,” said Joseph Bates, vice president of research at the GBTA Foundation. “Overall pricing for air, hotel and ground transportation in 2016 appears surprisingly stable. But a closer look shows concentrated areas where demand is pushing air prices higher. For 2016, India, China, Colombia, Mexico, Singapore and Australia stand out.”
On a worldwide basis, airline prices are expected to be nearly flat thanks to significantly lower energy costs, steady capacity growth and generally stable demand. Regionally, the report forecasts modest movement:
- Asia Pacific and Latin America: Small price increases of about 1.2 percent and 0.8 percent respectively
- Europe, the Middle East and Africa: A small increase of roughly 0.4 percent
- North America: U.S. fares slightly up (around 0.5 percent) while Canada is expected to see a sharp decline (about -5 percent)
These global and regional averages conceal important local variations. Six countries are projected to experience air fare increases driven by stronger demand:
- Colombia: Estimated increase of about 3 percent, supported by a rapidly growing middle class and a relatively stable economy that are lifting travel demand while capacity growth remains modest
- Mexico: Around a 3 percent rise, driven by robust domestic and international demand
- Singapore: Approximately a 3 percent increase, aided by lower energy prices and more accommodative monetary policy that stimulate demand
- India: About a 2.6 percent uptick, fueled by rising business and consumer confidence
- China: Near a 2.8 percent increase, sustained by strong domestic demand despite broader economic slowdown and fluctuating business travel volumes
- Australia: Roughly a 2.7 percent gain, as improving business conditions support increased domestic air travel
In contrast, the report highlights Venezuela as an outlier with a projected airfare increase of about 6.3 percent, driven by very high inflation, falling oil revenues and a currency regime tied to the U.S. dollar.
Overall, the 2016 Global Travel Price Outlook suggests that while headline travel prices may not change dramatically worldwide, travel managers and corporate planners should watch specific markets where local economic conditions and demand trends are exerting upward pressure on airfares.