Average global fares in reported US dollar terms (excluding taxes, fees and surcharges) have fallen by around 9% year-on-year so far this year, IATA said citing latest data.
Adjusting for the impact of earlier gains in the dollar, the international trade body of major airlines, estimates that airfares fell by around 4% in constant exchange rate terms in early-2016.
But given that the dollar has fallen sharply against most currencies in recent months, the distortions caused by its prior strength will ease over the coming months, IATA said in its latest "Airlines financial monitor".
“With oil prices up 65% since their January low, the biggest stimulus to demand from lower airfares now appears to be behind us,” IATA said.



Premium airfares have held up better than those in economy on many of the key premium routes so far this year, and premium traffic continues to offer an important buffer for overall airline financial performance, it said.
Premium international passenger traffic has grown more slowly than its economy counterpart so far this year. Premium fares have held up better than those in economy on many of the key premium routes.
As a result, IATA noted premium’s share of revenues on some routes has increased in annual terms (particularly on the North Atlantic and Europe-Asia markets, which together accounted for around two-fifths of total premium revenues last year).
In the current environment of downward pressure on yields, the high-yielding premium segment offers an important buffer for overall airline financial performance.
On crude oil prices, IATA said these have risen to six-month highs, but the market still expects the fares to be “lower for longer”.
Crude oil prices gained further during April, driven by market expectations of a possible freeze in production levels.
The price of a barrel of Brent crude oil ended the month at around $47/b, the highest level since November 2015.
“That said, the bigger picture is that oil prices are still around one-third lower in year-on-year terms. Moreover, with storage levels remaining very high for this time of year, the overriding market sentiment for oil prices is "lower for longer".
“Indeed, while the oil futures curve has shifted upwards in recent weeks, the market still currently expects Brent oil prices to remain below $50/b into early-2018,” IATA said.