Rising oil prices could trigger a 3.2% airfare hike in APAC

New Zealand's airfares could rise 7.5%.

Airfares in Asia Pacific could face a 3.2% hike in 2019 pricing amidst rising oil prices and trade war woes. In addition, the competitive pressure from a shortage of pilots as well as the increasing fare segmentation to improve yield could trigger the hike, a study by travel management firm Carlson Wagonlit Travel (CWT) revealed.

“Prices are expected to spike in many global markets even as inflation remains subdued,” CWT president and CEO Kurt Ekert commented.

The airfare hikes in the region will be led by New Zealand (7.5%) and India (7.3%). India is poised to be the world’s largest aviation market by 2025 as its airports are operating beyond capacity.

According to CWT, the aviation sector will be shaped by the introduction of ultra-long-haul flights and an increasing competition from the low-cost carriers.

The study also found that Chinese demand continues to soar high. By 2020, the country is expected to become the world’s biggest air travel market with flights going up 3%.

On the other hand, Japan airfares will not join the bandwagon as prices are likely to drop 3.9% amidst the country’s added capacity in preparation for the Olympic Games in 2020.

In connection to airfares, APAC hotel prices are also predicted to rise 5.1% as the sector’s outlook is driven by overall increase in air travel. CWT believes that New Zealand will lead the price hike with an 11.8% increase whilst Japan will not join the trend as hotel prices are expected to fall 3.2% in the country.

CWT added that Australia will largely increase its hotel rooms from 2019 to 2020 whilst the end of the political tumult period in Thailand could likely boost the hotel sector’s optimism.