Airfares in the UAE and worldwide are expected to stay elevated throughout 2025, driven by robust travel demand despite forecasts of relatively stable oil prices.
The sustained demand is attributed to a mix of factors, including corporate travel, MICE (meetings, incentives, conferences, and exhibitions) events, and the growing trend of bleisure travel, which combines business and leisure. Seasonal trips by residents and a surge in tourist arrivals, especially in Dubai, are further amplifying the upward pressure on airfare prices.
Adding to the challenge is the global aviation industry’s struggle with significant delays in aircraft deliveries. These delays are hindering fleet expansion plans for UAE and international airlines, constraining supply even as demand soars.
Demand Surge and Rising Costs
Online travel agency Musafir predicts a global airfare hike of 2–14% in 2025, citing inflationary pressures and operational challenges. Rising fuel costs and a strong US dollar are also expected to play a role in keeping ticket prices high.
“Corporate travel has evolved into a key driver of business growth and innovation,” said Sachin Gadoya, CEO and co-founder of Musafir.com. The agency highlighted destinations like Dubai, Paris, and Sydney as popular choices for bleisure travel, underscoring the UAE’s appeal as a key hub for global connectivity.
Aircraft Delivery Delays Impacting Growth
The International Air Transport Association (IATA) has revealed that aircraft deliveries have been significantly disrupted. In 2024, only 1,254 aircraft are expected to be delivered, 30% below earlier estimates. Although deliveries are projected to rise to 1,802 in 2025, this figure has already been revised downward from 2,293.
The backlog of unfulfilled aircraft orders has reached a record 17,000 planes, which, at current delivery rates, would take 14 years to clear. This shortfall is forcing airlines to operate under capacity constraints, limiting their ability to expand routes and manage costs effectively.
Oil Prices and Industry Implications
While oil prices are expected to average $79 per barrel in 2025—down from $82 in 2024, according to the International Energy Agency (IEA)—the savings may not translate to lower airfares. The IEA suggests that the global oil market will remain balanced, with production likely exceeding demand, but rising operational expenses and supply shortages in aviation will offset any potential cost reductions.
Long-Term Outlook
Aviation consultancy OAG has warned that the balance between supply and demand will remain critical in 2025. “Airfares are unlikely to see significant reductions as operational costs, supply shortages, and currency fluctuations continue to influence pricing,” the consultancy stated.
As the UAE’s population grows and tourism numbers climb, the demand for air travel is set to remain strong. Coupled with supply-side constraints, this will likely keep airfares high, reinforcing the importance of strategic planning for both travelers and airlines in the year ahead.
Key Takeaway
Despite a stable oil price outlook, a combination of robust demand, supply challenges, and rising operational costs will sustain high airfares in 2025. For travelers and businesses, this underscores the need for cost management strategies as the aviation industry navigates its recovery and expansion challenges.