Airfare surge seen for Thailand in 2018

Thailand is expected to see one of the steepest increases in airfares globally next year, a global travel management firm said this week.

Fares in the kingdom may rise 6.6%, well above the 2.8% increase projected for AsiaPacific in 2018, said a new study by Carlson Wagonlit Travel (CWT).

Globally, airfare is projected to rise 3.5% next year as crude oil prices rise, even as airline capacity is expected to increase 6% during the same period.

CWT’s projections mirror the trend fewer airfare cuts noted recently by the International Air Transport Association (IATA).

IATA earlier said that the price of air travel worldwide in the first quarter fell by 10% year-on-year, helping to drive robust growth in traffic demand.

After adjusting for inflation, average airfare at the start of the second quarter was 6% lower than a year ago, according to the global airline body.

IATA projects airfare in 2017 will be lower than last year, with average roundtrip cost per passenger, based on estimated worldwide expenditure on air transport, falling to US$353 (11,882 baht) from $371 last year.

In its new report, CWT said domestic air travel demand in Asia-Pacific, especially in China and India, will also contribute to fare increases next year.

But as many of the economies in Asia strengthen, weaknesses in infrastructure — airports in particular — are becoming increasingly apparent.

Across Europe, the Middle East and Africa, air travel is set to continue growing, with prices rising 7.1% in Eastern Europe and 5.5% in Western Europe.

But the Middle East and Africa only expect a 3% increase as they face ongoing security threats and an oil industry that is still in recovery.

Currency fluctuations in Europe may further affect airfare in 2018.

Given limited competition and the upcoming summer 2018 World Cup in Russia, Eastern Europe may again have the most significant price increases in the region.

Across Latin America and the Caribbean, prices are expected to change little in 2018 — up only 0.3%.

Airlines have cautiously ramped up capacity. A broader analysis of South America forecasts a 20% increase in scheduled flights by the end of 2019.

Low-cost carriers are well positioned for this area given the low penetration rate in the region, along with new, more efficient aircraft coming into operations next year and pushing down costs.

North America will see prices rise by a modest 2.3%, according to the projection. Citing the potential for stronger US travel restrictions, flights to the United States have already been reduced accordingly.

Canadian airlines are expected to compete aggressively given new market entrants and capacity growth of 11% in 2017 and 12% in 2018.

With the region’s air travel market nearly flat year-over-year in early 2017, competition is fierce between carriers that now compete on branded fares rather than on bundled fares or by carrier type.

The uptick in airfare will contribute to a big rise in overall travel costs next year — up to 4% in some sectors — said CWT.

Hotel prices are expected to be 3.7% higher, while ground transport such as taxis, trains and buses are only expected to rise 0.6% — significantly less than the 3% inflation forecast for 2018.

“The higher pricing is a reflection of the stronger economy and growing demand,” said CWT chief executive Kurt Ekert.