Just when you thought the cost of air travel couldn’t get any higher, a major study has forecast that airfares will rise further still in 2023.
The Air Monitor 2023 report predicts that airfares around the world are on the way up again this year due to capacity issues, rising fuel costs and inflation, among other reasons. And Aussies may have to put aside a little more extra than most to fly.
In Australia, domestic business class fares are expected to rise by nearly 20 per cent (19.4), with domestic economy fares forecast to grow by 4.7 per cent.
For travel across the ditch, business airfares are also expected to climb almost 20 per cent (18.8), while Trans-Tasman economy fares are predicted to rise by 5.5 per cent.
But the biggest airfare increases overall are forecast between Australia and Asia, with economy and business class fares expected to grow by 20 per cent and 6.2 per cent respectively.
It is possible however that the return of China (and with it more flights) to the international travel market could temper price rises, especially when considering the report was compiled before the announcement of China’s reopening.
Published by American Express Global Business Travel (Amex GBT), Air Monitor 2023 predicts prices will climb more sharply in Asia-Pacific due to the slower resumption of travel within the region following the global shutdown during the pandemic.
Flying further afield?
In Asia, it’s anticipated economy and business flights to and from Europe will grow by 12 per cent and 7.6 per cent, while Asia-North America economy and business flights could see increases of 5.6 per cent and 9.8 per cent respectively.
Airfares within and between Europe and North America should see more modest increases in prices, according to the report.
In its analysis, Air Monitor 2023 flags the key trends driving price movements including “airline capacity, inflation, and the impact of foreign exchange rates and fuel surcharges”.
“To generate the forecasts, the Amex GBT data science team used the Prophet algorithm for time series modelling that combined historical transaction data with International Air Transport Association (IATA) booking demand and capacity constraints, macroeconomic variables including per capita GDP, and key inputs such as the price of oil,” Amex GBT said in December.
You can obtain a full copy of the report here.
In December, the ACCC said Australian travellers could expect to see lower airfares as capacity returns to the aviation market.
