TravelNewsAsia.com
Tue, 12 March 2019

Air Fares Expected to Fall 4% by April

CWT Solutions Group, the consulting arm of CWT, has forecast that global average ticket prices (ATP) for air bookings will drop to around US$673 by April 2019, down just over 4% from February 2019 levels, as published fares correct from the sharp increase seen in the first two months of the year.

These findings are published in the third edition of its bi-monthly Air Trends Report, which uses a proprietary algorithm to predict changes.

The global ATP climbed approximately 6% month-on-month in January, and then a further 3% in February, to reach US$702. This was largely the result of airlines across the globe implementing new commercial policies and revenue management models, which pushed up airfares.

Etihad Airways Boeing 787-9 Dreamliner MSN389659 reg: A6-BLN in the background with a Lion Air Boeing 737-900ER MSN39880 reg: PK-LPF and a Singapore Airlines Airbus A380 MSN253 reg: 9V-SKY. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.

“We foresee a continued upward trend in the average ticket price through 2019,” said Christophe Renard, Vice President of CWT Solutions Group. “One of the reasons is that more airlines are looking to adopt IATA’s New Distribution Capability (NDC) standard as a means to generate greater ancillary revenues such as seat selection and baggage fees. Post-booking price tracking tools can be an effective way for companies to optimize the cost of expensive tickets before upcoming departures.”

Meanwhile, the usage of Online Booking Tools (OBTs) continues to gradually increase as the main OBT providers continue to improve the user experience, especially on mobile apps. Efforts are also being made to improve the content available through these channels. At the same time, corporate travel management teams are encouraging their travelers to book through OBTs and mobile apps.

OBT usage was stable at around 48% globally in January and February, after a 6% increase from October to December. It is forecast to rise again in March and April, with more than 50% of all bookings expected to be made through OBTs for the first time ever.

The report also predicts that travelers’ advance purchase behavior will worsen in over the next two months. Stricter enforcement of travel policies as a result of year-end budget considerations and belt-tightening saw improved advance purchase behavior in December, and this carried over to January and February – with around 47% of tickets booked more than 14 days prior to departure. With companies now relaxing travel restrictions, this is expected fall to 43% in March and April.

“In order to keep a handle on costs, travel managers are advised to stress the importance of booking in advance, either as a message displayed on the OBT or through targeted communications to individual travelers,” said Renard. “It’s also important to ensure that OBTs are properly set up to reflect the organization’s travel policy, or to configure these tools with bespoke settings for each market.”

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