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In a little over three weeks time, Scoot will join the first few airlines to raise fares in response to rising fuel prices. Other airlines and suppliers are likely to follow, with significant industry increases forecast and wide regional variation.

Scoot, an all-B787 Dreamliner airline, already offers very low fares, including to Berlin, so will remain highly competitive even after the price hikes.

According to Singapore Business, Scoot’s 5% average increase, to be imposed from 1 September 2018, will translate to one-way sector fare rises of between SGD 5 and SGD 30 (roughly the same in Australian dollars),

The carrier attributes the rise to a 40% year-on-year surge of fuel prices to about USD 73 per barrel on average.

“Besides increasing fares, Scoot is also looking at containing its costs,” the airline said. “Some initiatives being considered include exploring ways to reduce fuel burn, review of suppliers’ contracts and measures to improve productivity and keep manpower resources lean, amongst others.”

The International Air Transport Association (IATA) forecasts that the average return airfare before charges and taxes will rise about 3% in 2018. In May, Air New Zealand announced a 5% increase in domestic fares due to rising costs.

The fifth annual Global Travel Forecast, newly published by Carlson Wagonlit Travel and the Global Business Travel Association with the support of the Carlson Family Foundation, anticipates robust price rises in 2019, with hotels going up 3.7%, and flights 2.6%, driven by rising oil prices, a shortage of pilots, potential trade wars and increasing fare segmentation to improve yield.

In the Asia Pacific region, the effects on airfares are forecast to be a bit less than the newly announced Scoot increase. The report expects to see a 3.2% rise in 2019 pricing.

The report says the “vast majority of countries in the region” will see airfare rises. Australia is not singled out but New Zealand is tipped to leap above average price rises, hitting 7.5%. India is tipped to see prices increase by 7.3%.

Bucking the trend is Japan. Fares there will likely drop 3.9% due to the country’s added capacity in preparation for the Olympic Games in 2020, according to the Global Travel Forecast.

In Western Europe, fares are expect to rise 4.8%. The report says the increase will be especially pronounced in Norway (11.5%), followed by Germany (7.3%), France (6.9%) and Spain (6.7%). “Eastern Europe and the Middle East and African countries, on the other hand, will experience a decline of 2.3% and 2% respectively.”

North America will see airfares rise by a modest 1.8%, according to the projections.

Meanwhile, hotel prices are set to leap, according to the same report – and again, New Zealand is in the crosshairs.

The report tips Asia Pacific hotel prices to rise 5.1% – with a large discrepancy as Japanese prices are expected to fall 3.2%. New Zealand is set to rise a whopping 11.8%.

In Australia, 2019 and 2020 are expected to bring the largest number of new rooms becoming available, with an increase of 3.4% of total supply each year.

Hotel rates are expected to rise in Western Europe 5.6%, while declining 1.9% in Eastern Europe and 1.5% in the Middle East and Africa. Norway will lead with a rise of 11.8%, followed by Spain (8.5%). Spain is expected to replace the US as the world’s second most popular destination. (Hopefully the visitors to Spain won’t all head to Barcelona, where some residents are protesting against “over-tourism”.)

Other hotel rate raises tipped: Finland (7.1%) and France and Germany (6.8%).

Written by Peter Needham