Air fares are expected to increase this year amid high demand and pressure on supply, continuing a trend seen in 2024, according to various analysts, government data and trade body forecasts.
European air tickets were 6% more expensive in 2024 than in 2023, ForwardKeys says, while US Department of Labour figures show US airfares soared in December 2024 at the fastest rate for nearly two years. And, Reuters reports, for 2025, the International Air Transport Association (IATA) is predicting a rise of 15% in net profit for North American airlines.
Why are ticket prices rising?
The boost to profits comes after a period of geopolitical instability that affected some airlines’ bottom lines with flights to Israel grounded due to regional conflict and diverted routes around Russia and Ukraine causing greater fuel consumption.
Ongoing limitations in capacity and therefore supply of air tickets can be put down to continued supply chain problems with new planes from both Boeing and Airbus delayed and up to 10% of the European fleet awaiting repairs, according to travel analysts OAG. With Boeing, for example, facing a 5,500 plane backlog and only producing 44 planes in a good month, airlines are having to be creative when it comes to their scheduling. Ironically (for flyers at least) the more airlines have to cut their schedules, the more ticket prices go up.
What about consumer confidence?
But the pressures facing the industry and the rising prices have not affected consumer demand. While some travel and tourism stakeholders noted a “softening” in bookings in mid-2024, US travel agencies sold 17% more tickets year-on-year in December, according to Airlines Reporting Corp figures. That’s despite average ticket prices that were 4% higher than 2023. For last year as a whole, Airlines Reporting Corp (ARC) registered US ticket sales higher than they’ve ever been, at $99 billion (94.8 billion euros).
Global air passenger demand hit records in 2024, up pre-pandemic levels by 3.8%.
— IATA (@IATA) January 30, 2025
The desire to partake in the freedom that 🛫 makes possible brings challenges into focus; the tragic accident in DCA reminds us that #safety needs our continuous efforts. https://t.co/SmxV1MTJ3Y pic.twitter.com/pmUweK4LYG
It’s possible that the trade tariffs threatened by President Donald Trump could yet affect the positive outlook. Daniel McKenzie, a Seaport Research Partners analyst, told Reuters that tariffs and ensuing trade wars “are bad for demand” and can be viewed as having a “macro wildcard” effect on the industry. Another wobble factor could be felt from recent air traffic accidents and the noise coming from the Trump administration and stakeholders about air traffic control procedures and safety.
People want to travel
But, even though the Long-Haul Travel Barometer from the European Travel Commission (ETC) and Eurail BV found stagnating international sentiment and demand for long-haul travel to December last year, airline executives remain buoyant. In the words of Alaska Air’s CFO, Shane Tackett: “People want to travel. They’re still prioritizing experiences with their budgets.”
The industry believes, according to Reuters, that consumer confidence is up, at least among households with earnings of $100,000 (96,000 euros), and those earners are the segment responsible for three quarters of spending on air travel.
