Airfares for domestic flights in the U.S. have been on the decline over the past few years, dropping as much as 7% a year. But The Los Angeles Times reports that trend may be coming to an end.
A forecast by a global travel consultant predicts airfares in North America will inch up by 1% this year, while hotel rates will jump 2% to 4%.
BCD Travel, a consultant that works with corporate travel managers, attributes the increase to strong demand for air travel and rising fuel costs. The percentage of filled seats on each flight, known as the load factor, has also been at near record-high levels.
“High load factors may encourage airlines to pursue the fare increases they need to offset rising fuel and labor costs,” the forecast says. “Prices are climbing slowly in the markets with the strongest demand.”
BCD predicts that hotel rates will rise modestly this year in part due to the increased pace of new hotel construction, especially in the mid-scale and upscale tiers.
“Demand has been steady but not spectacular,” the report says.
BCD’s fare forecast is directed at corporate business travelers who often get special group rates, but industry experts say corporate rates generally parallel fares for regular travelers.
Data from the Bureau of Transportation Statistics show that the average domestic airfare dropped from $392 in 2014 to $377 in 2015 and $349 for 2016. For the first nine months of 2017, domestic airfares dropped to an average of $348, according to the federal agency.
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