American Express Business Travel Reports flat airfares in Asia Pacific

Fierce competition between airlines to capture the growing volume of leisure and business travellers on both domestic and international routes within Asia Pacific has kept airfares flat over the first quarter of 2007, with the airfare trends reported by American Express Business Travel in the Asia Pacific Business Travel Monitor for the first quarter of 2007 – the industry’s quarterly retrospective pricing benchmark to track airfare trends.

The benchmarking study found that overall airfare increases in the first three months of 2007 were unchanged compared to the previous quarter, however, year-on-year growth continued at a steady rate of 3%.

The only fare-type to report strong growth was in premium cabin seating where business discount fares increased by 7% both over the previous quarter and year-on-year, led by domestic and intra Asia Pacific routes.

Routes to the Americas continued to record the strongest average increase for the quarter at a rate of 1% compared to domestic, intra Asia Pacific and routes to Europe, Middle East and Africa (EMEA) which remained flat.

Kurt Knackstedt, Head of American Express Business Travel Advisory Services and Field Effectiveness for Japan, Asia Pacific and Australia said, “While fares are flat for the quarter, the year-on-year increase of 3% is underpinned by solid increases in high yielding first and business fare types reflecting the investment being made in business travel to support business investment in the region.”   

“The fact that discount business class was the only fare-type to increase for the quarter, shows the strong demand for premium travel in Asia Pacific.” 

“The results also indicate that while fierce competition is forcing airlines to rigorously examine and control their yield management, the tremendous growth in the region is strong enough to maintain current airfares.”

“Despite a flat result for the quarter across Asia Pacific, some markets bucked the regional trend, with Indonesia recording a 5% increase which was consistent across all international destinations as result of less competition in that market.” 

“Similarly New Zealand recorded a 4% increase for the quarter with positive increases across most fare types and all international destinations despite the battle between Qantas, Air New Zealand and Emirates for the highly competitive Trans-Tasman route,” Kurt added.

In Australia, discount business class airfares recorded the highest growth in Australia at 9% for the quarter compared to 2% growth overall and routes to the Americas increased by 8% compared to the average increase of 2% across all routes. 

Domestic routes remained flat for the quarter while intra Asia Pacific and routes to EMEA recorded modest growth of 2%.

Premium cabin fares recorded the strongest growth year-on-year with full and discount first class fares up 6% and full and discount business class fares up 8%.

In New Zealand, published airfares were up 4% for the quarter and 11% for the year, with discount economy and discount business airfares recorded the biggest increase for the year at 34% and 24% respectively.  Routes to EMEA and Intra Asia Pacific recorded the strongest increases both for the quarter and year-on-year.

The Business Travel Monitor is available on a subscription basis and additional detailed reporting at the city pair level is also available from the Advisory Services team.

Report by The Mole