Travel prices likely to remain high

Low-cost carriers (LCCs) - once known solely for their no-frills, short-haul offerings - have been going through a route awakening.

- Sarah Stanley

In recent years, LCCs have been adding new and farther destinations while introducing premium options, reshaping the competitive commercial aviation landscape and blurring the lines even more between full-service carriers (FSCs) and budget airlines.

While a natural assumption may be that the growth of LCCs will lead to more price competition, and in turn, lower airfares across the board, this is only partially true.

LCCs often offer more affordable options on certain routes, but the broader reality is much more nuanced.

The more likely scenario for airfare in 2025, according to aviation experts, is that flight prices will remain high and may increase further due to factors such as fuel costs, carrier-imposed surcharges and labour shortages.

Airfare adjustments are largely driven by the basic economic principle of supply and demand, which typically refers to the balance between how many seats airlines have available (supply) and how many travellers want to book them (demand).

When airlines have a high supply - such as a large number of unsold seats on a flight - but low demand, they often lower ticket prices to attract more passengers and fill those empty seats.

Conversely, when the demand is high, such as during peak travel seasons or for popular destinations, and the supply of seats is limited, airfares tend to rise.

Independent aviation analyst Brendan Sobie of Sobie Aviation explains that, as a result, airfare adjustments are difficult to predict - particularly for any long-term period beyond a few months - and vary greatly by market and route.

In November 2024, the Air Monitor 2025 report by software and services company American Express Global Business Travel (Amex forecasted that GBT) airfares on most routes would be higher in 2025.