Third-quarter airfares will increase year over year throughout the world and particularly in Europe due to persistently high jet fuel costs and carriers' decisions to constrain capacity in some markets, according to a new analysis by travel consultancy Advito.
According to Advito, third-quarter airfares on average on international and domestic routes alike are set to rise from 2025 levels in all regions of the world in business and economy class.
The increases are perhaps most acute in Europe, where business-class international and domestic fares each are projected to increase 9 per cent year over year, each at least matching the highest of any region. Advito projects average business-class and economy-class fares on European domestic routes to increase 14 per cent and 10 per cent, respectively, by far the highest of any region.
"European airlines are facing sustained and ongoing cost pressure," according to Advito. "While many carriers have mitigated fuel price increases, these buffers are now rolling off, forcing airlines to pass higher costs to consumers."
The report noted some carriers' decision to remove short-haul inventory, including Lufthansa's decision this year to cut 20,000 short-haul flights. "This is impacting major hubs such as Frankfurt and Munich and contributing to higher fares," according to Advito, which also cited fare hikes by European low-cost carriers and government-imposed sustainable aviation fuel requirements as key factors in the higher average fares.
In North America, Advito projects Q3 international business-class fares to increase 5 per cent year over year, while international economy-class fares increase 1 per cent, and business-class and economy domestic fares increase 2 per cent and 1 per cent respectively.
"Limited fuel hedging is leaving carriers exposed to rising fuel prices, with costs increasingly passed on to passengers, sustaining higher fares particularly on routes to Europe and Asia," according to Advito.
Advito said it uses predictive analytics to produce airfare calculations based on fare availability for the third quarter in global distribution systems, using May searches.
Meanwhile, Q3 hotel pricing "reflects a more complex and uneven landscape, with inflationary pressure continuing but increasingly concentrated in specific regions and markets," according to the report.
Unlike Advito's air price forecast, projected hotel pricing ranges from year-over-year drops of 6.1 per cent in the Middle East and 2.5 per cent in Asia, to increases of 12.6 per cent in Latin America and 5.9 per cent in North America. The average daily rate across Europe is projected to increase 5.7 per cent, but this varies across markets.
Countries such as Norway (+13.2 per cent) Luxembourg (+11.5 per cent) and France (+9.9 per cent) are expected to see the strongest increases due to sustained demand and constrained availability, according to Advito. In larger markets like the UK (+4.3 per cent), Germany (+5.2 per cent) and Italy (4.4 per cent) rate increases will show “more moderate growth”. Meanwhile, in Turkey and Croatia, ADR is expected to decrease by 1.4 per cent and 1.9 per cent, respectively.
"Europe is no longer a uniform cost environment, requiring more granular sourcing strategies rather than broad regional assumptions,” according to Advito.
Advito said its hotel projections were based on predictive analytics around flexible best available rates available in GDSs and online travel agencies in the third quarter.
Advito anticipates heightened pricing pressure on car rental rates in Europe for the third quarter, compared to those in the United States. Forecasted rate increases range from 1 per cent in the Nordics to 4 per cent in France, Italy, and Switzerland, and as much as 7 per cent in the UK.
While EVs are becoming more competitive, growing demand is also pushing rental rates higher in some European markets, Advito said.
World Cup update
The FIFA World Cup soccer tournament is in full swing in the US, Canada and Mexico, and Advito suggested suppliers' early forecasts of strong demand were overestimated, thanks in part to tighter US entry requirements, with hotel rates declining after FIFA reduced room blocks.
"Pricing volatility will also depend on team performance," Advito noted, "with strong runs from teams with large fan bases, such as Argentina or Mexico, driving demand spikes in the US, particularly during the final stages."