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Average airfares worldwide ‘set to drop 4% by April’

March 15, 2019 Headline News No Comments Email Email

Global average ticket prices (ATP) for air bookings will drop to about AUD 948 by April, down just over 4% from February levels, as published fares correct from the sharp increase seen in the first two months of the year, according to latest forecasting.

CWT Solutions Group, the consulting arm of CWT (formerly Carlson Wagonlit Travel, now known just by its initials), has published the findings are published in the third edition of its bi-monthly Air Trends Report, which uses a proprietary algorithm to predict changes. It estimates the global ATP will drop to USD 673 (AUD 948) in a couple of weeks.

CWT (a business-to-business-for-employees travel management platform) says the global ATP climbed approximately 6% month-on-month in January, and then a further 3% in February, to reach USD 702 (AUD 989). This was largely the result of airlines across the globe implementing new commercial policies and revenue management models, which pushed up airfares.

“We foresee a continued upward trend in the average ticket price through 2019,” vice president of CWT Solutions Group, Christophe Renard, stated.

“One of the reasons is that more airlines are looking to adopt IATA’s New Distribution Capability (NDC) standard as a means to generate greater ancillary revenues such as seat selection and baggage fees. Post-booking price tracking tools can be an effective way for companies to optimise the cost of expensive tickets before upcoming departures.”

Meanwhile, the usage of Online Booking Tools (OBTs) continues to gradually increase as the main OBT providers continue to improve the user experience, especially on mobile apps. Efforts are also being made to improve the content available through these channels. At the same time, corporate travel management teams are encouraging their travellers to book through OBTs and mobile apps.

OBT usage was stable at around 48% globally in January and February, after a 6% increase from October to December. It is forecast to rise again in March and April, with more than 50% of all bookings expected to be made through OBTs for the first time ever.

The report also predicts that travellers’ advance purchase behaviour will worsen in over the next two months. Stricter enforcement of travel policies as a result of year-end budget considerations and belt-tightening saw improved advance purchase behaviour in December, and this carried over to January and February – with around 47% of tickets booked more than 14 days prior to departure. With companies now relaxing travel restrictions, this is expected fall to 43% in March and April.

“In order to keep a handle on costs, travel managers are advised to stress the importance of booking in advance, either as a message displayed on the OBT or through targeted communications to individual travellers,” Renard said.

“It’s also important to ensure that OBTs are properly set up to reflect the organization’s travel policy, or to configure these tools with bespoke settings for each market.”

MEANWHILE, the International Air Transport Association (IATA) announced global passenger traffic results for January 2019 showing traffic (revenue passenger kilometres or RPKs) rose 6.5% compared to January 2018. This was the fastest growth in six months.

January capacity (available seat kilometers or ASKs) rose 6.4%, and load factor crept up 0.1 percentage point to 79.6%.

“2019 has started on a positive note, with healthy passenger demand in line with the 10-year trend line,” said IATA director general and chief executive Alexandre de Juniac.

“However, market signals are mixed, with indications of weakening business confidence in developed economies and a more nuanced picture across the developing world.”

Edited by Peter Needham

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