Business travel demand likely to rise marginally in 2025: OAG

Airline fares to stay steady, capacity challenges to remain
2024-12-16
/
/ New Delhi
Business travel demand likely to rise marginally in 2025: OAG

OAG says it expects capacity to grow by between 3-4 pc during the year and any more will be a pleasant surprise

As the year 2024 draws to a close and the new year approaches, attention has turned towards the fate of aviation industry in 2025. According to OAG, an aviation consultancy, the industry should have a smooth ride with stable fares, but constraints on capacity will remain due to delays by both the major aircraft manufacturers.
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Business travel around the world, that has been one of the slowest segments of tourism to recover in the post-pandemic era, is set to continue its steady, but slow, march towards the 2019 peaks in the year 2025. This is one of the forecasts made by aviation consultancy firm OAG that has released a report on how the aviation industry would fare next year.

In a press statement OAG says that its Chief Analyst John Grant has shared his new predictions for the airline industry in 2025. According to Grant, airline capacity challenges of 2024 will continue into 2025 and indeed through to 2026 as airlines struggle with the fallout from MRO (Maintenance, Repair, and Overhaul) issues and production delays from major aircraft manufacturers. OAG says it expects capacity to grow by between 3-4 pc during the year and any more will be a pleasant surprise.

Another prediction by Grant is that corporate travel demand will continue slow recovery. It says that while the demand for air travel will generally remain strong, and the pre-pandemic normal travel patterns will resume. However, the surge in “revenge spending” is over. It adds that corporate travel demand will gradually recover, compensating for any loss driven by the revenge spend travellers. Therefore, OAG expects global load factors in 2025 to broadly remain at similar levels to 2024.

With demand remaining steady, OAG says that average airfares are unlikely to fall in 2025, even though the price of oil has fallen to one of its lowest since September 2018. In 2025, average airfares are unlikely to fall significantly, as that balance between supply and demand remains crucial. Shortages of supply, rising operational costs, along with a strong US Dollar will impact any scope for dramatic reductions, says Grant.

According to OAG, another rather positive news for the airline industry is that the long-range single aisle aircraft are unlocking exciting new routes. It says that new technology and the expansion of long-range single-aisle aircraft will lead to a series of new routes being launched to smaller market pairs. Likely regions for development are the North Atlantic, South and Central Asia which should lead to exciting announcements later in 2025, says OAG.

Continuing with new technology helping the aviation industry, OAG says that it expects artificial intelligence to boost airline and airport efficiency as airports and airlines will increasingly use AI in their operations as they seek to drive further efficiency and reduce cost. It says that low-cost carrier EasyJet is trialling remote contact pier or aerobridge connectivity at London Gatwick, which potentially could save time, resources and shorten the turnaround time for aircraft.

OAG also sees new year bringing progress in airport facilities worldwide. It says that the new Dalian Jinzhou Bay International Airport (DLC), in China, set to be the world’s largest offshore airport, could just squeak in with a 2025 opening. In India, it expects that besides the opening of Mumbai and Delhi’s secondary airports, the delayed new terminal at Guwahati airport should also open this year.

In London, it says, there is hope for approval for a second runway at Gatwick and Heathrow might finally start work on a third runway, but adds that Heathrow’s expansion has been hanging fire for over 40 years.

Another major prediction by OAG is that commercial services using eVTOL aircraft may take to skies in California. It says that while not a replacement for large commercial jets, these four-passenger aircraft are set to improve connectivity to scheduled airlines at the major airports across the state.

OAG says that airline mergers, takeovers, and acquisitions will be on the cards in 2025 with at least one major transaction expected to take place in Europe and the continent’s big three legacy airlines all showing interest.

Finally, OAG predicts that airlines, airports and all parts of the aviation industry will continue the drive towards sustainable operations. Meanwhile, regulators will find new ways to either excessively tax the sector or place capacity caps on movements or noise, without realising the economic impact of such measures.

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