Intercontinental airfares in the third quarter especially in economy class appear softer than they were in the second quarter, according to a new Advito report, which the consultancy largely attributed to "rising economic uncertainty worldwide."
Third-quarter intercontinental fares have most notably moderated on routes originating in North America, according to Advito's quarterly Travel Price Index, released Thursday. Advito projects such Q3 airfares to drop 2 percent year over year in business class and 5 percent in economy.
"North America is widely impacted by the drop in bookings following the latest trade policy development in the U.S.," according to the report.
Advito projects year-over-year declines in economy-class Q3 intercontinental airfares originating in Latin America (down 4 percent), Europe (down 3 percent) and the southwest Pacific (down 2 percent). Business-class fares look a bit sturdier, forecast to decline year over year only when originating in North America and Latin America (down 3 percent).
From North America, "intercontinental airfares are dropping to almost all regions," according to Advito, the consulting arm of travel management company BCD Travel. "Geopolitical turmoil, recently fueled by trade policy changes, continues to dampen travel demand. Latest U.S. visitor statistics show a fall in arrivals. With capacity largely unchanged, airlines have to stimulate demand by lowering fares."
Domestic fares in the third quarter are proving more resilient, according to Advito, as delays in aircraft order fulfillment have helped to constrain available seat capacity, with buttressing fares "helping stabilize rates despite reduced corporate travel activity." The consultancy projects Q3 domestic fares in North America to increase 1 percent year over year in each business and economy class.
Advito said it uses predictive analytics to produce airfare calculations based on fare availability for the third quarter in global distribution systems, weighted toward July travel prices.
The consultancy projected the third-quarter global average hotel rate to increase 2 percent year over year, with larger increases in Europe (4 percent) and Africa (5 percent) and 1 percent declines each in North America and Latin America.
"The easing of business travel demand is driving more moderate cost increases in many markets as we move into the third quarter of 2025," Advito noted. "Europe, however, is showing strong increases as summer demand grows. North America is impacted by weakened business and leisure demand."
Advito projected the overall third-quarter average hotel rate in the United States to decrease 1 percent year over year, and noted "most U.S. and Canada secondary and below markets are seeing moderate [best available rate] decreases. However, many primary markets are showing strong year-over-year and quarter-over-quarter increases."
The consultancy said its hotel projections were based on predictive analytics around flexible best available rates available in GDSs and online travel agencies.
Advito projects third-quarter car rental rates in the United States to increase 4 percent year over year, citing improved utilization of supplier fleets and growing leisure demand, "despite softer commercial demand."
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