American Express Global Business Travel (GBT), a software and services company for travel, expense, and meetings & events, which is part the financial services giant, American Express, has projected a rise in global airfares on most routes in 2025. 

In a report, the company attributes this increase to factors such as rising wages, staffing shortages, largely due to ongoing labour disputes in North America and higher fuel prices, influenced by geopolitical tensions. 

Fuel prices have been largely stable in 2024, even as air travel recovered strongly. Geopolitical tensions can push up fuel prices, which feed through to airline costs and ultimately impacts the price a passenger pays for his ticket, says the report.

In addition, airlines continue to add new surcharges and low-cost carriers have invested in expensive extras like airport lounges and better seats.

In its annual report, American Express states that the fares will vary significantly by region, while North America and Europe are anticipated to experience a modest increase of about 2 pc, Asia and Australasia, who have recently lifted pandemic related restrictions couple witness a rise of as high as 14 pc. 

While American Express GBT expects the pace of these price hikes to moderate, it also highlights challenges for travel buyers. Airlines are increasingly implementing advanced revenue management strategies and dynamic pricing, which may further complicate the purchasing process.

Gerardo Tejado

“In 2025, businesses will be faced with a new reality in their air programmes, even though price rises are levelling off and capacity has returned, fares remain high. Corporates should expect tough negotiating stances from airlines, particularly as carriers evolve their distribution models. Business travel buyers will need to be strategic, for example, around loyalty and program performance data to get value in this environment,” says Gerardo Tejado, Senior Vice President Professional Services, Amex GBT.

The report also adds that while airlines are optimistic about demand increasing in 2025, capacity expansion efforts are facing constraints due to delays in the delivery of new aircraft from Airbus SE and Boeing, as well as extended servicing times for jet engines, factors which are preventing more aircraft from entering service.

According to a report by Bloomberg, the pace of rising airfares is expected to moderate after a substantial surge following the COVID-19 pandemic. The report also states that increases in ticket prices next year are likely to more than erase any decreases before 2024, meaning some fares may return to post-pandemic highs.