Airfare Hikes Are Another Blow to Strained Meeting Budgets

With the Iran war in its fourth week, the airline industry is facing its biggest disruption since the pandemic. The cost of jet fuel has nearly doubled in the last three weeks, and United Airlines CEO Scott Kirby just announced that fares will increase by 20% if jet fuel prices remain elevated for longer.

Other U.S. carriers are expected to follow United’s lead, according to industry analysts.

Internationally, Air New Zealand was the first to announce that ticket prices would go up, followed by dozens of carriers, from Air France to Qantas to Cathay Pacific Airways.  

Jay Klein, CEO of M-Plus Global Events, says his company is warning clients that programs may well see increases in airfares in the near future. "We also know that prices tend to go up quickly, but they take much longer to come back down, so we anticipate pricing to be up for the next year and probably throughout 2027."

What Can Planners Do?

A new survey of 300 meeting professionals and 1,000 meeting/conference attendees by MMGY Travel Intelligence found that nearly two-thirds of the 300 U.S. planners surveyed (63%) cite travel costs as a key concern in the next 12 months. A full 43% of the 1,000 U.S. meeting attendees surveyed said that event cost is the primary barrier to participation in conferences.

Some trade shows have responded by promoting  their negotiated flight discounts. The SEMA Show, which will be held this November in Las Vegas, is offering 8% negotiated discounts on air, which are on the high end of the standard range of 3 to 8% usually offered on published fares. Show organizers have started promoting the discounts with social media posts. 

Any increase in airfare costs is a difficult blow to meeting budgets that are already stretched thin. Chris Johnson, director, global events, travel & sports sponsorships at Land O’Lakes, said his budget has remained flat for the past five years, while costs have increased 32% or more.

His company has split some national events into regional ones so that salespeople can drive, rather than fly. For incentive programs, he’s prioritizing destinations with strong, competitive airlift and multiple routing options; considering shoulder seasons and destinations closer to the majority of qualifiers; and trying to plan further out.

“There is always a point where sustained increases require trade‑offs, but rather than diminishing the experience, we’re focused on reimagining how incentive travel is delivered,” he said. 

A travel manager at a medium-sized software company said that they have begun cutting back on certain features that meeting travelers have come to expect, such as premium seats with more legroom and direct flights. She’s also finding that travelers are often willing to spend their own money to have a more convenient and comfortable trip.

Virtual Option

Companies could be quick to move to the virtual option: 43% of CFOs responding to the most recent SAP Concur Global Business Travel Survey said that more than half of their company’s business travel could effectively be replaced by teleconferencing or other communication methods that don’t require travel — even though 94% of business travelers said travel was “helpful, if not essential, to success in their roles.”  

For the immediate future, the impact of fare hikes will largely depend on the nature of the event and whether attendees are able to book their air far enough in advance to avoid them. For the annual Incentive Research Foundation Invitational, the organizers don’t expect any immediate impact and are seeing strong year-over-year registration for their June meeting — considered to be one of the incentive industry’s main events.

“But we know that it's putting increased pressure on budgets that, in many cases, were already strained,” said Andy Schwarz, IRF vice president content and communications. “It’s an unfortunate situation, and the full travel ecosystem is experiencing extraordinary pressure that we hope will end soon.”

The long-term implications on association events — that rising travel costs, combined with global instability, may limit access to participation, particularly for those without organizational funding — are what concern Kyle Jordan, director of meetings at INFORMS (The Institute for Operations Research and the Management Sciences), the most. "This makes it even more important for associations to reinforce the value of attending and support informed decision-making rather than react too quickly to short-term volatility.”