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IATA predicts record low fares throughout 2016
March 24th 2016
Global airfares look set to dip further this year, continuing last year’s downward trend, predicts the International Air Transport Association (IATA). Read More » The global trade body said average fares, as reported in U.S. dollars, fell 11.7% last year, or approximately 4.5% when adjusted for currency fluctuations.
Although decreases in adjusted fares stabilized towards the end of 2015, IATA said competitive pressures within the industry would likely translate into more yield declines in first-half 2016 as currency hedges unwind. IATA expected passenger yields to decline another 5% for the year and for cargo yields to drop by 5.5%. IATA said almost 1% of global GDP (US$750 billion) will be spent on air transport in 2016.
Carriers in the Asia-Pacific are starting to feel the pinch, especially in the premium cabin. While still mostly profitable as their operational costs are lower, yields have been slumping. Hong Kong’s Cathay Pacific Airways reported an 11.4% overall yield decline across its network in 2016. Auckland’s Air New Zealand said its yields fell 4.7%, and Gulf heavyweights, Emirates Airline and Qatar Airways, said their premium demand and yields decreased. LCC Thai AirAsia, said it observed a 3% average fare drop in 2015, to 1,667 baht ($47.5) per flight sector.
