Business travellers face soaring bills
Air travel – especially business class fares – could climb ever higher in 2023, according to a study.
The report by American Express’s Global Business Travel Hub combines airline capacity, exchange rates, fuel surcharges, remaining global covid restrictions and inflation as indicators of how much ticket prices could increase on routes – and the conclusions don’t look appealing for travellers.
The reality
Business class airfares look to be increasing the fastest on all popular routes, including those between Europe and North America, where passengers will face an estimated price rise of 3.7%. What might look like a small change from a percentage point of view, however, is anything but when you price it up.
For example, a business class ticket with JetBlue from London Heathrow or Gatwick to JFK in December, which this month will set you back an average of £5,700 return — in 12 months’ time that goes up by £210 (£5,910).
Another big increase can be found on flights within Europe, with business fares between nations in the continent skyrocketing by 6% in 2023.
Effects on financial map
The study also found that price hikes will be felt by business travellers headed to or from financial hubs, which have been more sluggish in returning to normality following covid restrictions, such as Hong Kong.
If these predictions hold, fares on routes between Europe and Asia in business class will increase by 7.6%, with economy seats on the same route expected to rise by a whopping 12%.
Continental drifts
The report also warned that some nations in the Asia-Pacific region have been slower to reopen after covid travel restrictions, and an increase in demand combined with relatively strong economic prospects could put pressure upwards on prices.
One of the biggest drivers for the overall increases, according to the number crunchers behind the study, lies with the major airlines’ reliance on business travel following the recent pandemic to help boost falling revenue, resulting in carriers putting more capacity on business routes.
Despite a public shift back to more widespread leisure travel with the easing of restrictions, the study says many airlines are on track to continue to maximise their aircraft for business travel.
The other side
As an additional point, despite the predicted rise in airfares, London Heathrow is expecting business travel to account for a higher share of its traffic in 2023, as the corporate market has been “showing signs of recovery” in recent months.
The UK hub airport said that business travellers made up 21.5% of its total passenger traffic in the third quarter of 2022, which compared with 28% during the same period in 2019.
Our take
The natural instinct is to believe that higher fares means more revenue, but the economics of aviation have always been complicated.
Higher fuel costs, heightened security and health restrictions and the still lingering effects of the pandemic mean nothing is that simple.
Though it also means that if they are recovering, both airlines and airports will seem attractive prospects for investors.