Airfare continues to be a major expense for corporate travel programs. With the costs of flying influenced by multiple external factors, travel managers have the task of navigating fluctuating costs while optimizing budgets. Rising air ticket fees and prices are driven by more than just supply and demand. Operational costs, global events, and shifting airline strategies all play a role in determining the final ticket cost. Understanding relevant cost factors and preparing for their effects are crucial, especially for corporate travel managers looking to maximize the value of their programs.
Key Factors Affecting Airfare in 2025
In 2025, expect the cost of flying to continue climbing, albeit more modestly than in years past. Airlines are facing increasing operational expenses, many of which will be passed to travelers.
Labor Costs and Airline Profitability
According to the International Air Transport Association (IATA), flight crew salaries and expenses amount to about 9% of airline costs. While this is not the largest expense, it is among the top contributing factors. Recently, labor disputes have led to higher wage agreements between airlines and their crews. While these new contracts provide greater stability and reduce the risk of service disruptions, they also increase airline operating costs. Airlines are projected to increase fares to offset profitability declines. Businesses can expect these labor-related expenses to factor into rising ticket prices, particularly for premium and business-class fares that require more service-oriented labor.
Fuel Prices and Geopolitical Risks
The single largest operating cost for airlines is aircraft fuel and oil, accounting for almost 30% of total expenses. While fuel prices remained relatively stable in 2024, geopolitical tensions have the potential to push prices higher at any time. Conflicts in oil-producing regions, trade restrictions or tariffs, and supply chain disruptions can lead to sudden spikes in fuel costs. When this happens, airlines pass increases on to travelers through higher ticket prices and fuel surcharges. International corporate travel is particularly susceptible to these fluctuations, making it important for businesses to plan accordingly.
Surcharges and Hidden Fees
Additional fees increasingly impact total ticket costs. Fuel surcharges in particular are superfluous, sometimes amounting to more than $1,000 for a round-trip flight. Additionally, baggage fees continue to rise. All major US airlines, except for Southwest, increased checked baggage fees by an average of $5 per domestic flight since the beginning of 2024. A proposed rule that would have required airlines to disclose fees for baggage and ticket changes upfront was blocked by a US appeals court, meaning hidden fees remain a challenge for travelers.
Premiumization Trends
A growing number of travelers are willing to pay more for comfort and an enhanced in-flight experience. Experts already anticipate the demand for premium services will increase by 25% this year. In response, even traditionally low-cost carriers (LCCs) are investing in premium offerings. JetBlue, for instance, has introduced lounges and improved seating to attract business travelers. This shift means that budget airline fares are creeping up, eroding cost savings that some companies once relied on. Corporate travel managers may need to rethink which airlines provide the best value, especially as standard economy seats become more densely packed while premium economy and extra-legroom options expand. Business class offerings are also becoming more competitive, creating an arms race among airlines to enhance their premium experiences.
Strategies for Managing Corporate Flight Travel Costs
Now more than ever, corporate travel managers must implement strategic measures to control costs while maintaining travel efficiency and efficacy. Some approaches to consider include:
- Advance booking and fare monitoring
Use travel management platforms to track fare fluctuations and book trips in advance whenever possible to lock in lower rates. - Route optimization
Evaluate alternative airports, carriers, and connections to avoid high-surcharge routes. - Policy adjustments
Reassess corporate travel policies to account for shifting airline pricing structures. - Airline negotiations
Work with travel management companies or directly negotiate corporate contracts with airlines to secure volume-based discounts. - Carrier selections
Book with airlines that disclose their fees upfront or bundle fares. Frequent flyers should also consider joining loyalty programs.
