BCD Travel has adjusted its forecasts for air fares in 2018 based on strengthening demand and higher oil prices.
The travel management company says that it expects air fares globally to rise by 1% on average this year.
As the economic outlook improves, strong global air travel demand and rising oil prices are helping to push up fares. In response to supply constraint and increasing demand, BCD raised its oil price assumption from US$50 per barrel to US$60.
However, there are regional differences.
The TMC has lowered its prediction for intercontinental business class fares in Europe from 2% to 1%, but increased the forecast for intercontinental economy from 0% to 1%.
"Intercontinental economy airfares will increase slightly more than our original forecast as the global economy continues to strengthen," says Charuta Fadnis, BCD Travel's senior director of research and analytics.
The regional changes are shown in this week's chart below:
Airlines have looked at strong traffic growth and increasing load factors this year and believe they can push through higher prices to offset the price of oil and salary costs, both of which are edging upwards.