Airfare predicted to be cheaper in 2025, due in part to drop in jet fuel prices

SINGAPORE – Against the backdrop of rising costs, there is a glimmer of hope that airfare is getting cheaper in 2025.

To predict trends for the year ahead, travel companies often utilise vast amounts of data to identify pricing patterns and analyse traveller behaviour. Reports of late have listed more affordable airfare among their findings.

In December 2024, the International Air Transport Association (Iata) forecasted that the average return airfare in 2025 would drop by 1.8 per cent compared with 2024.

In another report by flight-tracking company Hopper, it found that long-haul flights have become more affordable. Its data indicated that flights between the United States and Asia, for instance, cost 11 per cent less in the first half of 2025 than in the same period in 2024.

In February, travel booking platform Expedia released its 2025 Air Hacks Report for Singapore, stating that average economy class ticket prices dropped by 12 per cent, while premium travel was 8 per cent cheaper in 2024 than in 2023.

Its findings were based on a comparison of average round-trip ticket prices for January to October in 2024 and the same period in 2023, sourced from Airlines Reporting Corporation’s (ARC) global airline sales database.

American company ARC manages the world’s most comprehensive airline ticketing dataset, with information from over 12 billion annual passenger flights operated by more than 480 airlines worldwide, according to Iata.

Referencing the Expedia report, Mr James Marshall, vice-president of global air partnerships at Expedia, says: “The data we have gives us a good indication of how trends are going, and usually, we can expect such trends to continue.”

Fuel prices drop, flight options rise

Experts say prices are largely dictated by supply and demand. When airlines struggle to fill seats, they lower fares to attract passengers. Conversely, strong demand allows them to charge higher prices.

However, multiple other factors – fuel cost, aircraft availability, geopolitical tensions and seasonality – also shape pricing.

Mr Kadam Aggarwal, a partner at Asia-focused management consulting firm YCP Auctus who specialises in aviation and airports, forecasts that airfare will be cheaper in 2025 as a result of lower jet fuel prices.

“It is expected that ticket prices this year should be similar to 2019’s prices, seeing as average jet fuel prices – the most critical parameter driving airfare – are becoming very similar to 2019’s levels,” he adds.

Iata predicts jet fuel will average US$87 (S$116) a barrel in 2025 – US$12 less than in 2024.

One key area to watch, however, is the adoption of sustainable aviation fuel (SAF), which is roughly three times the cost of conventional jet fuel, and is likely to affect ticket affordability in the future.

Still in the nascent stages of adoption, SAF is an alternative fuel produced from non-petroleum sources, such as waste oil and agricultural waste. It remains expensive due to limited production capacity and high feedstock costs.

Post-pandemic, travellers are venturing farther and airlines are responding by opening new routes and increasing flight frequencies to popular destinations.

Mr Marshall says: “People realise they have more choices now and can shop around for good deals.”

Mr Alan Lim, a director of management consultancy Alton Aviation in Singapore, agrees. “The business model for low-cost carriers (LCCs) is to run as many flights as possible and try to keep costs down, which can have an impact on overall airfare.”

More than 100 airlines operate out of Changi Airport, of which around a fifth are LCCs.

Mr Kadam says both the airport’s extensive network and the presence of multiple LCCs drive up competition among airlines in Singapore.

“Compared with Western markets, South-east Asia has a dominance of low-cost carriers simply because its markets are more price-sensitive. LCCs have thrived a lot more here,” he adds.

In other words, as flight options increase, one of the ways airlines will have to vie for travellers’ dollars is by keeping airfare competitive.

How travel patterns affect airfare

Business travel influences airfare patterns, especially when it comes to identifying the cheapest months and days to book flights for leisure travellers.

Expedia’s 2025 Air Hacks Report found that February is the most expensive month to travel for Singapore travellers – likely due to the Chinese New Year holidays.

In comparison, June and July are the cheapest months to fly premium and economy classes respectively.

Mr Marshall says corporate and leisure travel create distinct booking patterns, which are important levers of how airfare will be calculated.

He notes that corporate travellers typically book premium seats, while economy seats are booked by a mix of both leisure and business travellers.

He hypothesises that in June – Singapore’s school holiday season – leisure travel increases and more economy seats are snapped up by families or larger groups travelling together.

As such, demand for premium class seats in June may be relatively lower than in other months, and airfare for those classes of travel dips.

In July, as leisure travel slows and corporate travel picks back up after the June holidays, bookings for premium classes will likely increase with less demand in economy, resulting in lower airfare for economy seats.

While travel reports offer valuable insights, airfare largely remains unpredictable. Alton Aviation’s Mr Lim advises travellers to stay flexible.

“Stick to the basics, such as avoiding travel on peak days and timings by flying mid-week and being flexible with your choice of airline,” he says. “With so many carriers flying out of Singapore, shopping around can often make a difference.”