Intercontinental airfares in early 2024 are decreasing, and domestic airfares are stabilizing as hotel rates continue to rise, according to Advito’s quarterly price index report, released Tuesday.
The index, which compares historical pricing data with future shopping data for the current quarter, showed intercontinental economy fares in the first quarter of 2024 originating from North America are down 9 percent year over year, and business-class fares are down 7 percent. Advito noted that this is in part due to capacity recovery in flights to Asia and the Southwest Pacific, where fares are normalizing from “unusually high” levels last year.
As such, intercontinental fares from those two regions have the largest year-over-year declines in the first quarter, the report indicated. From Asia, intercontinental economy fares are down 23 percent year over year and business fares are down 19 percent; in the Southwest Pacific, those declines are 8 percent and 11 percent, respectively.
Intercontinental economy fares from Europe are down 9 percent year over year in the first quarter, and business-class fares are down 6 percent. Advito also noted that frequencies on North Atlantic routes have had “solid growth.”
The only regions with year-over-year increases in intercontinental airfares for the first quarter are Africa, where both business and economy fares are up 1 percent year over year, and Latin America, where economy fares are up 1 percent though business fares are down 2 percent. Brazil currently is driving the increase in fares to South America, according to Advito.
Domestic fares, meanwhile, are in a “stabilization phase,” according to Advito, in which capacity recovery is complete and strong demand is keeping fares at the current high levels. Domestic economy fares in North America are up 1 percent year over year and business fares up 2 percent in the first quarter. In Europe, both economy and business domestic fares are up 3 percent. In Asia, first-quarter domestic economy fares are down 1 percent, and business fares are down 2 percent.
Advito’s report also zeroed in on American Airlines’ New Distribution Capability fares, comparing them both to American fares in global distribution systems and Delta Air Lines’ and United Airlines’ fares in GDSs. The data looked at fares booked between Nov. 27 and Dec. 4 for travel in January 2024 in top business travel markets.
In those comparisons, Advito reported an average $126 price gap in in American’s roundtrip domestic Economy fares on NDC versus fares on the GDS and a $516 gap on roundtrip transcontinental Business fares. Compared with Delta’s and United’s fares on the GDSs, however, American’s NDC fares were “overall higher” and “not so appealing when compared to U.S. competitors,” according to Advito.
For hotels, several markets around the world are seeing “significant” rate increases due to a combination of inflation and strong, though slowing, leisure travel demand, with global average daily rates up 7 percent year over year in the first quarter. However, those increases appear to be slowing, and occupancy is lower compared with 2022, according to Advito.
On a regional basis, the biggest year-over-year average daily rate increases for the first quarter are in Latin America and Europe, each up 11 percent, according to the report. ADRs are up 4 percent in Asia, up 3 percent in both North America and Africa and up 1 percent in both the Middle East and the Southwest Pacific.
