Airlines ‘lost money’ during World Cup
Airlines are likely to have lost money during the Brazil World Cup earlier this year despite carrying a record number of additional travellers to the event, according to new analysis.
Air Cube, an IT and business intelligence consultancy for the airline and airport industry, said an additional one million people travelled to Brazil for the football tournament.
And an analysis of booking and pricing data on two sample routes – Madrid to Sao Paulo and Santiago de Chile to Sao Paulo – showed that airlines hiked fares by an average of US$400 for the period.
However, a 30% drop in business travel on the flights from Madrid suggested that airlines probably lost money, said Air Cube.
"This brought the total average price paid for air tickets down by 30% in the World Cup year meaning that, despite carrying 15% more passengers, airlines earned 25 % less revenue on the Madrid – São Paulo route in 2014 than they did in the year earlier," it said.
"When we started this analysis, we were fully expecting to find that airlines had enjoyed a windfall taking fans to Brazil to watch the World Cup," said Air Cube spokesman Jerome Perez, "but what we actually found was something more interesting which gives us an insight into the key drivers in the airline business; the effect of the World Cup seems to have been to attract a high number of very price-sensitive customers but, crucially, to dissuade more profitable business customers from travelling at all."
Looking at flights from Santiago de Chile, there was a 50% increase in passengers and revenues were up by 17%. However, as revenue grew by less than traffic, the average ticket price was down.
"Crucially, the number of business class tickets increased slightly helping to maintain growth in overall revenue. In other words, by securing the level of business passengers, airlines secured their overall revenues," said Perez.
"In summary, even if we cannot generalise this analysis to all routes, dates and passenger profiles, it is interesting to see the gap between airlines pricing strategy and actual revenues generated."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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