UAE: Airfares likely to remain high in 2025 due to strong travel demand
Prices of flights should remain high in UAE and around the world in 2025 due to good travel demand as oil prices will probably remain steady this year.
This ongoing demand will be driven by a combination of corporate, MICE (meetings, incentives, conferences, exhibitions) and bleisure (business and leisure) tourism as well as seasonal trips that individuals in the UAE and around the world make every year.
This high demand has a primary driver behind it, which is the continuous rise in the number of new tourists and people moving to UAE, specifically Dubai. This population and tourism increase is likely to raise demand for travel even more which keeps flights slightly on the higher end in 2025.
Also, the worldwide aviation is facing the aircraft deliveries – stalling the UAE and international airline’s expansion plans.
Flights, estimates the online travel company Musafir, will increase between 2 and 14 per cent globally in 2025 as a result of fuel and inflationary pressures. But companies subsidize them with creative travel plans and loyalty programmes.
"In 2025, business travel is more than just a business purpose, it’s also an enabler of innovation and development," says Sachin Gadoya, CEO and co-founder of musafir.com. The travel agent said Dubai, Paris and Sydney came on top of the list for bleisure extensions.
The airline industry consulting firm OAG said that average flight costs aren’t going to decrease in 2025 as oil prices dropped to one of their lowest levels since September 2018.
"The average flight price in 2025 won’t drop significantly because that equilibrium between supply and demand will be there. Lack of supply, a hike in the cost of operation and an unstable US dollar will undermine any potential for big discounts," it said.
Aircraft deliveries, which dropped to just a dozen aircraft from their high in 2018, the International Air Transport Association (Iata) reported last month. According to the report, deliveries for 2024 are 1,254 aircraft, 30 per cent less than estimated at the beginning of the year.
"Deliveries will increase to 1,802 in 2025 (it has been reduced from 2,293), and more reductions are expected," it said.
‘The backlog — the sum of total uncompleted orders — for new aircraft now stands at 17,000 planes, an industry-best number,’ Iata continued. Backlog at delivery rates would be eliminated in 14 years.
The International Energy Agency project Brent crude price to average $79 a barrel in 2025 as opposed to $82 per barrel in 2024. "We expect relatively small price volatility based on estimates of the general equilibrium of global petroleum liquids supply and demand," said the international organisation.
"We expect Brent crude oil price to decline less than rise since we believe world oil demand will increase more than decrease as expected," it added.
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