The balance of power between the three major alliances over the Atlantic is shifting, according to a new report by BCD Travel.
In its 2020 Industry Forecast, the company says, "This year a more aggressive pricing strategy has helped United Airlines and Lufthansa win corporate business and recover lost market share. However, Delta Air Lines/Air France-KLM has also made gains by simplifying its contracting process and replacing Alitalia with Virgin Atlantic in the joint venture. In 2020, it could be the turn of American Airlines/British Airways/Iberia to respond with more competitive offers."
The company also says that long-haul airfares fares will rise by an average 1% in 2020.
"Business fares are rising on long-haul routes, where network airlines make most of their profits," it reports. "Even Middle Eastern carriers, once seen as a low-cost, one-stop option for flights to Africa and Asia, are increasing fares to repair their finances. Negotiated deals are reducing long-haul prices for corporate clients, as long as they can deliver substantial business class bookings. On short-haul routes, discounts are small or non-existent as strong low-cost carrier competition means fares and margins are already low."
The forecast fare increases to various regions are shown in the chart below.
Increases in hotel average daily rates will be higher than those in air fares, it says.
"High occupancy has persuaded developers to build more hotels, mainly under the management of four chains: Accor, Marriott, Hilton and IHG. London and Paris, two of Europe's most expensive cities, have been major hotspots for hotel openings, as have German cities Frankfurt and Düsseldorf; Warsaw, Poland; and Lisbon, Portugal," the company said.
Average daily rates are expected to increase by between 1 and 3%, with variations as shown in our chart below.
The company said, "Demand should also stay strong, as long as European economies maintain their growth. However, geopolitical developments could depress demand across the region. Hotels in Spain, Ireland and Luxembourg will see the highest increases, with ADRs rising by 3% to 5%. Among the region's largest business travel markets, Germany will see a 2% to 4% rate rise, while both France and the U.K. will have increases of between 1% and 3%. Rates will rise faster for Parisian hotels."