A stronger global economy is set to push up airfares at a faster rate in 2018 than previously predicted, according to research from BCD Travel.
The TMC is forecasting that overall global airfares will rise by 1 per cent this year – slightly higher than during its original 2018 forecast released in September.
BCD said this increase was being fuelled by stronger demand due to improved economic conditions around the global, as well as the impact of higher oil prices.
Charuta Fadnis, BCD Travel’s senior director of research and analytics, added: “Our initial forecasts for 2018 remain largely on target. Intercontinental economy airfares will increase slightly more than our original forecast as the global economy continues to strengthen.”
BCD has increased several of its regional forecasts for airfares from its initial report, including North America, Asia and the Middle East.
In Europe, the TMC said that intercontinental economy fares were now likely to go up by 1 per cent in 2018, while it lowered its forecast for intercontinental business class fares from 2 per cent to 1 per cent.
“High load factors may encourage airlines to pursue the fare increases they need to offset rising fuel and labour costs. Prices are climbing slowly in the markets with the strongest demand,” added BCD in its report.
BCD said it was maintaining its forecast that global hotel rates would rise by 2-4 per cent this year. Although it said prices were likely to go up faster in China - by 3-5 per cent year-on-year - and at lower rate in some destinations such as Saudi Arabia, Egypt, Kenya and Nigeria.