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Airfares are expected to be flat in 2015 despite a predicted increase in demand for air travel, according to a study from travel consultancy firm Advito.
Its annual industry forecast showed competition among carriers is growing, especially in the low-cost market, but airlines “fear damaging business and consumer confidence” by increasing fares too fast.
Advito, the consulting arm of BCD Travel, expects airfares to rise little more than inflation, and in some markets may stay flat or fall.
The US domestic market is one exception as consolidation has reduced competition and is pushing up airfares in some markets. The study predicts though that US airlines are still being cautious “out of fear that excessively high prices could negatively impact demand”.
The study found that hotels are seeking corporate rate increases of 6 to 8 per cent on average. In North America and Europe, Advito predicts that hotels will “raise prices steeply” for clients unable to drive business to preferred suppliers.
Buyers with a strong record of meeting targets coupled with favourable stay patterns will successfully contain rate rises yet again, Advito said.
The study also showed that car rental suppliers want to raise corporate rates after years of flat pricing, but Advito doesn’t see any evidence of this in the market. However, it states the situation has remain unchanged for so long that 2015 may be the year rates “finally do go up”.
Advito publishes its annual forecast to give travel and procurement managers a benchmark range of projected prices so they can prepare for supplier negotiations and budgeting.