Growth in global air travel continues to slow. Traffic increased by 4.6% year-over-year during the first five months of 2019, down from 6.8% a year ago.1
Demand is still growing, and together with higher fuel and labor costs, this will ensure that fares rise in most markets in 2020.
However, as airlines continue to add capacity, this will limit fare increases in most markets – but not where demand is particularly strong, such as China and India.
Latin America: 3%
Middle East: 1%
North America: 1%
Southwest Pacific: 1%
Regional air highlights
Most fares will increase by 1% or 2%, except for intercontinental economy travel, which will remain flat.
Intercontinental fares will rise by 1%; strong demand in major markets will drive regional fares up by 2% to 3%.
While most fares will increase, regional economy fares will be flat.
Recovering demand will push up regional fares by 3%, but intercontinental fares will be unchanged.
Intercontinental economy fares won’t increase. All other fares will rise by 1% or 2%.
Expect fares to rise by 1% in all travel segments.
While regional fares will rise by 1%, increased competition will push intercontinental fares down by 1%.
|Average ticket prices|
% change YoY
|Average ticket prices|
% change YoY
1 IATA, Air Passenger Market Analysis, May 2019
Global hotel rates will increase by 1% to 3% in 2020. Most regions will see average daily rates (ADRs) rise in this range. Rate increases will be higher in Asia, averaging 2% to 4%, as hotel openings fail to keep up with the pace of demand. Latin American hotels will see the smallest rise in ADR, averaging 0% to 2%, due to more modest growth in demand.
Spotlight on Asia
Hotels will keep adding new properties in Asia, but demand will continue to outstrip supply. Rates will rise significantly in Japan, host of the 2020 Summer Olympics.
Average daily rates
% change year over year
|Africa||1% to 3%|
|Asia||2% to 4%|
|Europe||1% to 3%|
|Latin America||0% to 2%|
|Middle East||1% to 3%|
|North America||1% to 3%|
|Southwest Pacific||1% to 3%|
|Global||1% to 3%|
Source: BCD Travel
After slowing in 2019, global economic growth will stabilize at 2.8% in 2020. But the prospects for advanced economies and emerging markets are quite different. The performance of the North American economy will continue to weaken, but emerging regions, including Africa, Latin America and the Middle East, can expect growth to strengthen.
|World GDP growth||3.2%||2.7%||2.8%|
Trade conflicts are top concern
A single issue dominates economic fears: trade wars. As growth slows, more countries could become increasingly protectionist, making matters worse.
Regional economic growth forecasts
Source: Oxford Economics, June 2019
Experts believe global oil spot prices will range from US$60-$75 per barrel.2 Supply stability seems assured, as OPEC continues to show restraint and rising U.S. output helps to offset Iranian losses. Global oil demand will increase by just 1.4% in 2020, but growth could be weaker if international trade relations deteriorate further. Policymakers may try to stimulate demand but will also be keen to ensure producers commit to pricing stability. Oil prices in 2020 should be in line with the level currently expected for 2019.
2 Economist Intelligence Unit, June 19, 2019
Oil price assumption
US$67 per barrel
Oil prices in 2019
Brent crude spot price per barrel (US$)
Source: U.S. Energy Information Administration, Brent spot per barrel, monthly average
Travel risk and security
Terrorism remains a dynamic global risk, posing a serious threat to employees and companies. Using it to justify investment in travel risk management may overplay its significance as a genuine threat to travelers. The disruption of organized groups like Al Qaeda and the Islamic State means seemingly random attacks by individuals have become the most likely threat in developed countries.
However, incidents this year in Nairobi, Kenya, and Sri Lanka are a reminder that some groups are still capable of launching organized attacks in areas frequented by business travelers.
European and North American security services’ success in thwarting attacks may push terrorists to target other places.
Health risks are always a danger for travelers. According to the World Health Organization, large outbreaks of deadly diseases are becoming the “new normal.” Climate change, rainforest depletion, large and highly mobile populations, weak governments and conflict are making outbreaks of diseases like Ebola, cholera and yellow fever more likely and easier to transmit.
What’s more, low inoculation rates in Europe and North America mean travelers must also contend with diseases such as measles, mumps and rubella that once were considered under control in those areas.
Whether it’s flooding in South Africa or severe hailstorms in Guadalajara, Mexico, travelers are increasingly faced with disruptions caused by extreme natural events. As most are difficult to predict, the best way to reduce risk is for companies to plan standard responses and prepare travelers for potential crises.
Populist and often right-wing politicians are being elected around the world. Intent on challenging established practices, this new breed of national leader may disrupt the diplomatic traditions that helped defuse international disputes and support the status quo for decades.
The political doctrines of some of these new leaders and their backers could threaten travelers targeted because of ethnicity, gender or sexual orientation.
In addition, the bureaucratic complexity caused by the U.K.’s muddled exit from the EU means its relations with the rest of Europe in 2020 remain unclear, adding further uncertainty for businesses and travelers. Tensions continue to rise on the Korean Peninsula and, especially, in the Middle East as Iran becomes more isolated.
While terrorist attacks, natural disasters, disease outbreaks and geopolitical events get a lot of attention, and can have a high impact, employers must not forget the daily risks faced by all travelers. They are more likely to suffer from petty crime or illness while on a trip than be involved in a major crisis. Travel managers must plan their response to major events but also provide travelers access to the support they need for these everyday risks.