International airfares set to drop in 2024

airfares

The cost of flying internationally is set to drop next year but any savings will be offset by a rise in domestic airfares, according to a new report by American Express.

The latest American Express Global Business Travel (AMEX GBT) report forecasts that international airfares from Australia and New Zealand will decrease following a post-pandemic surge in costs.

Economy and business class fares for domestic travel within Australia between 2023 and 2024 grew around 3 per cent, according to AMEX GBT.

Offsetting that rise, the cost of international airfare between Australia and Asia has dropped 5.6 per cent for business class passengers. Economy class flights to North America are also down 7.7 per cent and New Zealand down 3.9 per cent. But business class flights to New Zealand rose by 2.5 per cent.

“But even as we see signs of moderation, the wider outlook is uncertain. Geopolitical tensions could spill over into the global economy, dampening already moderate growth prospects,” said Dan Beauchamp, Head of Consulting at Amex GBT.

“The world’s carriers continue to face headwinds. Cost pressures – most notably fuel, wage bills and debt servicing costs – could weigh on airline balance sheets.”

Tom Walley, Global Managing Director of Flight Centre’s Corporate Traveller, also expected premium international flight seats to drop further.

“The business travel industry is healthy and is already seeing some critical changes come through,” he said.

“Premium fares have already dropped, and we can expect to see economy fares come down by mid-2024 as flight capacity from international carriers increase.”

Business class seats to destinations such as London and New York are reducing for the first time since the pandemic, Walley says, adding that international demand will continue into 2024, but seat capacity will soften prices.

Competition will also begin driving international travel prices down as Chinese carriers made a strong return to Australian capital cities in the final quarter of 2023. All eight Chinese airlines that operated to Sydney pre-pandemic have now returned, with the final carrier, Sichuan Airlines, marking the milestone at the end of October 2023.

Further, China Eastern Airlines and China Southern Airlines both returned to Brisbane this month. Existing carriers are also increasing their capacities, with available seats up 25.6 per cent in September 2023 compared to the same time last year.

Walley predicts peak travel periods, such as the 2024 European and North American summer, will continue to bring about high demand.