Economic crisis didn’t cut cost of air travel – AMEX

Guest Writer

Wednesday 3 March 2010 – Despite expectations that the Global Financial Crisis would produce significant savings for travellers, results from the fourth quarter 2009 American Express Business Travel Monitor indicate a mixed picture.  The results reveal that year-on-year, published airfares increased one per cent overall in the Asia Pacific; and comparing the third to the fourth quarter of 2009, there were price increases across Business and Economy classes.  

Commenting on the findings, Jonas Borglin Head of Advisory Services for American Express Business Travel, Japan, Asia Pacific and Australia says, “When the economic crisis hit, almost immediately the industry felt the consequences as both leisure and corporate travellers scaled back or stopped travelling.  To protect their interests, airlines responded by reducing their fleet inventory and restricting flights and routes.  While the perception may have been that travel was much more affordable during the economic crisis, in many cases published airfares increased.  

“Where travellers did benefit during the crisis was that some airlines provided greater access to cheaper seats.  This may have created the perception that it was a buyer’s market, when in reality published prices didn’t move much overall.”  
 
Borglin believes that as the economy continues to strengthen we’ll likely see prices rise further and that it will be more important than ever for businesses to gain control of spending.
       
“We have entered a new normal, where we expect that travel volumes and spending patterns will differ from what they were prior to the economic crisis.  However as companies regain their confidence and travel does pick up again, there is a real risk that the cost will be significant for businesses unless they have clear visibility and control of their spending.”

American Express Business Travel is working with businesses of all size to help them drive savings and gain deeper insights into their travellers’ behaviour.

“Coming out of the economic crisis, we’re giving companies the confidence that the money they invest in travel will contribute to their success and not be a burden to their bottom line. ”

Country Specific Results – Q4 2009

In Australia, published airfares were flat overall when comparing the third to fourth quarters.  They increased 2% for domestic flights, curbed by a 5% airfare reduction for flights to the Americas.  The greatest price increases occurred in Economy class - Economy Discount flights were up 10% year on year and 5% quarter-over-quarter.  

In China, published fares were down 1% overall quarter-over-quarter and 6% year-over-year.  There was a strong bounce back in Business Discount airfares which increased 7% in the last quarter, following a 20% year-on-year reduction.  

In India, there were significant airfare increases right across cabin class and destination.  Comparing the third to fourth quarter of 2009, airfares increased 11% overall, with a 23% price rise in Business Discount tickets.  Domestic airfares increased 18% quarter-over-quarter, a significant spike when you consider that prices were down 7% year-on-year.  

Continues Borglin, “Decreased inventory, combined with some consolidation in the market has led to an overall increase in fare prices in India.”  

In Japan, quarter-over-quarter airfare changes were flat, with no significant movement.  However, comparing Q4 2009 to the same period in 2008, airfares increased 9% overall in both air class and destination.
“In a sign of the potential price rises to come, Japanese airline JAL recently announced plans to raise fuel surcharges for its all international flights from April 1.  Domestic carrier All Nippon Airways filed a similar request with the ministry this month.”

In Singapore, published airfares were up 1% overall - no change from year-over-year.  Airfares rose 2% quarter-over-quarter for flights to Europe, Middle East & Africa and throughout the Intra Asia Pacific.  

Concludes Borglin, “In April, new fares are expected to be announced by airlines in Singapore.   I predict that if the economy continues to regain strength, local airlines will respond by lifting prices between 1-6 per cent.”

– ends –

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