Brexit fears over sharp fare rises to US

by Business Travel iQ | 10 January 2019

TMC predicts increases on most routes as capacity is constrained. If the UK leaves the EU with no deal, the pain could be much worse

Business class air fares to the United States from the UK are set to increase by 2.6 per cent, according to a new forecast for the year ahead. In its Air Monitor 2019, American Express GBT says that demand for flights are outpacing capacity and airlines are renewing airplanes to improve efficiency rather than to expand volume within their fleet.

The travel management company says that fares from the UK and Europe are generally increasing as a result, as shown in this week’s chart below.

2019 Air Fare Forecasts

COTW 100119

The highest increases will be seen on economy class fares to Asia.

“Fares to Middle East destinations are forecast to fall from all regions, in both business and economy classes. Overcapacity on Middle Eastern routes is the chief factor in the expected price fall,” the company said.

Joakim Johansson, vice president of business development, American Express GBT, says, “Current global political and economic uncertainties create a challenging environment for price forecasting.”

The Amex GBT forecast is based on five years of flight transaction data combined with variables including oil prices, economic projections and airline strategies to forecast price changes on key business travel routes around the world.

The fare forecasts will be viewed with concern among UK travel buyers who are nervous about the effects of Brexit on the pound-dollar exchange rate.

This week’s amendment by MPs, which means that Theresa May will have to issue a plan B within three days if the vote for the Chequers deal goes against her, has actually helped support sterling. However, the reality that things in the world of Brexit can change from day to day means the pound is likely to endure a rollercoaster ride in 2019. If the UK crashes out of the EU with no deal, many forecast that the pound will plummet, meaning these forecast rises on key business routes are likely to climb much higher in real terms.

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