The projected gentle global airfare hikes in 2026, after a
projected average year-over-year decline in 2025, offers corporate travel
buyers a window of leverage to lock in deals with airlines under favorable
terms.
That's the conclusion of travel management company CWT VP
and global head of consulting services Richard Johnson, whose company earlier
this month released with the Global Business Travel Association their 2026
travel pricing forecast.
The CWT/GBTA forecast projects that average global airfares
in 2026 will increase 0.4 percent—$3—to $708, after a projected 2.2 percent
decline for full-year 2025.
"For those of you who are
negotiating with your preferred suppliers on the airline side, our
recommendation would be do so now," Johnson told buyers last week at
GBTA's annual convention in Denver. "Take advantage of the fact that you
are not seeing high increases in the next 12 months or so and leverage that. Lock
in your agreements. Try for longer agreements with your airlines. Leverage your
volumes with your preferred carriers."
Avrio Institute CEO and president Shawn DuBravac, whose
company developed some of the forecasting models used by CWT and GBTA to
develop the forecast, pointed to several factors beyond broader economic
uncertainty projected to inhibit fare growth, notably lower fuel costs and
stabilized labor costs.
"If you look at fuel costs, for example, they're half
of what they were at the peak that we saw in 2022," DuBravac said in the
Denver session. "Now they're still up from where we were in 2019, but
they're down in the last year." He added that labor costs have "moderated
significantly" from levels in prior years.
DuBravac said that with limited upward pressure on fuel and
labor costs could allow carriers the flexibility to more aggressive price fares
to compete for corporate business.
"Generally what you typically see from airlines, or any
business in any industry, is that when their cost structures go down, they
don't immediately follow that up with price declines unless the demand
environment has weakened significantly and they're trying to adjust to that,"
DuBravac said. "And so I think you will see the airlines selectively use
market dynamics. They're going to look at what's the underlying demand."
Lower fuel and labor costs will afford carriers negotiating
space to attract corporate business in times of uncertain demand, he said.
"I think as we move in the back half of 2025, airlines will be looking at
what does demand look like on different segments in different markets. And
because the cost structure has been down, they will have the ability to lower
prices in markets where demand has weakened."
CWT in the forecast noted that "If carriers have to
contend with pressure on operating margins next year, it might encourage them
to court business travel accounts more actively. This puts buyers in a stronger
position to renegotiate deals. However, corporations can expect tough negotiating
stances from airlines."
Fare Forecast by the Numbers
CWT and GBTA projected 2025 average airfares to decline year
over year in North America (down 2.9 percent), Latin America (down 0.4 percent)
and the Asia-Pacific region (down 1.8 percent), with fares on average in
Europe, the Middle East and Africa set to increase 0.6 percent. They forecast
increases in 2026 in each region, ranging from 0.8 percent (Asia-Pacific) to
2.1 percent (EMEA).
While certain factors affect each region in particular—slow
post-pandemic recovery in Asia-Pac, environmental regulations in Europe,
exchange rate fluctuations in Latin America—the air demand malaise of 2025 is
driven in large part by macroeconomic forces. Much of the uncertainty is driven
by businesses assessing the tariffs announced and in some cases delayed by the
Trump administration, DuBravac said.
"You do see real signs of uncertainty," said
DuBravac, pointing to indices of
corporate economic policy uncertainty. "It's come down just a little
bit, but still is historically high from where it has been, and obviously all
of that uncertainty puts a tremendous amount of pressure on businesses as they
rethink their supply chains, as they rethink their customer base and as that
flows to how they manage their travel programs."
CWT and GBTA developed a set of projections in the event of
a global economic downturn, but DuBravac noted that "the probability of a
recession in particular here in the U.S. has diminished from where it was last
year," and now stands at less than 30 percent.
Despite the passage earlier this month of Trump's signature
spending legislation—the so-called "big
beautiful bill"—DuBravac said a natural endpoint for the economic
uncertainty that has gripped many corporate travel programs might not be in the
immediate offing.
"There's this sense I think in the marketplace that
there will be some type of agreement and that this will settle out,"
DuBravac said. "My sense is that this is a popular tool for the current
administration and that it isn't going to wane. They will continue to use trade
policy to achieve broader objectives throughout their administration. So I
think this uncertainty is something that will be with us for the next three
years."