Uncertainty Will Reduce Air Demand in 2020, Says Report
By Harvey Chipkin
Political and economic uncertainty around the world will contribute to a continued slowdown in demand growth for air travel in 2020, according to The Air Monitor 2020, published by American Express Global Business Travel (GBT). Despite rising costs for oil, labor and infrastructure, fierce competition in the sector indicates that airlines will have minimal leverage to raise fares. Joakim Johansson, vice president, global business consulting at GBT, said that while uncertainty looks to be a key theme in the coming year, several factors are likely to affect buyers of business air travel in 2020, such as airline retailing strategies, growing fare segmentation and increased focus on sustainability. In North America, according to the report, trade tensions will continue to cause drag on economic growth. A large capacity increase means fares within the continent are predicted to rise by only 1.5% across both business and economy. Fares to European destinations could also increase, due to a reduction in capacity from Norwegian Air. However, Brexit has the potential to dampen any increases.