Airline Execs Predict More Air Traffic, Higher Costs in 2017

Jan 24, 2017

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Airline executives are predicting more air traffic in the coming year, and they say additional costs could potentially get passed along to passengers. The outlook comes from the IATA January 2017 Airline Business Confidence Index Survey, a quarterly poll of airline chief financial officers and cargo leaders.

After an overall increase in passenger traffic in the fourth quarter of 2016, airline executives are looking forward to more passengers occupying cabins in the coming year. Nearly three out of four executives said they expect passenger traffic volumes to increase. However, concerns about terrorism could affect where that growth takes place. The executive panel expressed concern over marketplaces that demonstrated uncertainty — particularly Turkey.

Although more passengers are taking to the skies, profitability may still be a struggle for some airlines. Only 42% of respondents expressed optimism that their bottom lines would increase in the coming year. As a result, passengers could begin to see additional ancillary fees when flying, especially those who opt for “basic economy” fares.

Ancillary fees for extras may not be the only cost passed on to the end customer. Executives predict that adjustments in the oil market could increase business costs for airlines. A new factor could also force prices to go up: human resources. One-third of executives responding noted that the increasing price of oil and “emerging labor cost pressures” lead them to expect higher input costs in the coming year.

So what does this all mean for frequent flyers? With more passengers traveling across the country, the potential for more competition exists for low-cost airfares. Furthermore, passengers can expect to pay more as the year goes on, as airlines often pass along their costs to the end traveler.

Despite uncertainty in the marketplace, there are still ways to find cheap airfare. Our experts recommend setting up automated tools to be notified when airfare drops, and taking advantage of Deal Alerts as they arise.

Featured image courtesy David McNew/Getty Images.

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