UAE to See High Airfares in 2025 Due to Strong Travel Demand

Traveling rates in the UAE, as well as the rest of the world, remain on an upward trend and are expected to see high airfares in 2025, driven by travel demand that would not really go down just because of the stabilization of oil prices. According to experts in the industry, the continuous demand from corporate travel, MICE (meetings, incentives, conferences, and exhibitions), and bleisure (going from business straight to leisure) travel and annual seasonal trips are still believed to contribute to demand not slowing down.

Key Factors Responsible for High Airfares:

• Strong Travel Demand: The UAE, especially Dubai, is seeing influx of tourists and newly new residents, fuelling travel demand; this increase likely keeps airfares high in 2025.
• Corporate and Bleisure Travel: Most of the demand for reasonable flights is being driven by corporate trips and bleisure trends. Popular destinations feature among such trips include Dubai, Paris, and Sydney.

Industry Challenges and Forecast:

• Aircraft Delivery Delays: Due to delays in aircraft deliveries, the global aviation sector is suffering, which hampers expansion plans for all airlines in the UAE and around the world. Consequently, such constraints and activities lead to more strict flight capacities, thereby adding to the ticket prices.
• Fuel Prices and Inflation: Musafir, the online travel agency, says ticket prices globally will increase by 2-14% in 2025 because of higher fuel prices and inflationary trends.

Now corporate travel is looked upon as a major growth and innovation driver. Musafir.com CEO Sachin Gadoya said airlines are adapting to rising costs by using loyalty programs and adopting innovative travel solutions.

Global Aviation Outlook

The dip in aircraft deliveries from previous years has been publicly stated by the International Air Transport Association (IATA). Hence, it derived predictions that future deliveries would be 30 percent below initial forecasts in 2024. The shortage will stretch well into 2025, as there are currently more than 17,000 unfilled orders. This situation could take years to resolve.

Oil prices may remain low, but said OAG, “these conditions will not allow for significant reductions in airfares by 2025.” There’s the perennial supply-demand imbalance, operating costs and the strength of the dollar that seem to strengthen this assertion.

Oil Price Projections

The Brent crude oil average price is expected to be lower than the $82 per barrel that is projected for 2024 but higher than the price of $79 per barrel targeted for the average in 2025 by the International Energy Agency. However, projected global oil production for the year looks balanced enough, no significant decrease in fuel prices will happen.

In summary, high airfares may still continue in the coming years, as airlines will have to cope with reductions in service availability, raised operational costs, and increased demand for travel, both across the UAE and globally.