As air travel makes a steady recovery post-pandemic, current inflation figures signal an imminent increase in the average ticket price (ATP) for flights within Africa, Europe, and the Middle East.
According to the 2024 Global Business Travel Forecast, recently published by CWT, a leading business travel and meetings specialist, and the Global Business Travel Association (GBTA), the world’s largest business travel trade organization, the ATP for these regions is projected to reach $879.
The report reveals that the global ATP for flights booked for business travel witnessed a remarkable surge in 2022, experiencing record-breaking price increments. Specifically, the ATP rose by an astounding 72.2% YoY, reaching $749 in 2022 far surpassing the figures seen in 2019 at $670.
However, a notable distinction exists in Africa, Europe, and the Middle East, which exhibited the highest ATP rates in 2022. CWT anticipates a further 2.9% increase in prices later this year, followed by a 2.2% rise in 2024.
Although the demand for air travel has rebounded vigorously, with passenger numbers approaching pre-pandemic levels, this resurgence has been driven primarily by pent-up leisure travel demand. Yet, the aviation sector is grappling with the constraints imposed by labour shortages and supply chain disruptions, which have continued to limit airline capacity
- While demand has recovered strongly with passenger numbers quickly approaching pre-pandemic levels, driven primarily by pent-up leisure travel demand, airline capacity continues to be constrained by labour shortages and supply chain issues.
- Looking forward, ATP growth is likely to be more modest at 2.3% in 2023 and 1.8% in 2024, albeit from an already high base. Still, many corporate buyers now have less leverage to negotiate with airlines, as their travel volumes remain below pre-pandemic levels.
- At $855, the Europe, Middle East, and Africa (EMEA) region recorded the highest ATP in 2022, compared to other parts of the world. This represents a 31.5% increase from 2021. More modest price increases are expected going forward, with ATPs predicted to rise 2.9% this year and 2.2% in 2024.
Why air travel costs may increase?
The report expects a more moderate escalation in prices due to ongoing economic uncertainty and gradual supply-side improvements over the next 12-18 months. Rising fuel costs, labour shortages, and supply chain hurdles, combined with fervent demand, led to a surge in travel prices in 2022, surpassing the previous year’s predictions.
Additionally, high inflation has upped operating expenses for travel providers, a burden partially transferred to travellers. These trends persist into late 2023 and 2024.
Patrick Andersen, CWT’s Chief Executive Officer, underscores the combination of demand and supply-side pressures that drove travel prices to unprecedented heights last year.
- “Looking forward, prices seem to be levelling off with much milder increases projected over the next 12 to 18 months. We could now be looking at the true net cost of travel. Our focus remains on helping our customers find the right strategies and solutions to get the most out of their travel budgets, meet their ESG commitments, and maximize the ROI on their travel spend.”
- “As this research outlines, it’s clear that rising costs and pricing pressures will likely continue to be a significant factor in business travel for the foreseeable future.
- “And as we experienced over the past few years, we may also continue to see different pricing fluctuations across industry verticals, business sectors and global regions. While business travel continues to rebound, there will be a continuing balancing act among demand, cost, and ESG concerns.
- So, with a forecast ahead for more volatility, our goal is to provide insights like these to help travel buyers, suppliers, intermediaries and finance executives continue to understand, evaluate and adjust their business travel strategies,” said Suzanne Neufang, Chief Executive Officer, GBTA.
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