Base air fares continue climb across the board

Asia Pacific - Corporate travel costs have risen as much as 9% in the second quarter over 2007, signalling a time for companies to pay more attention to their corporate travel policies.

Second-quarter published fares in Asia Pacific have grown 3% over the previous quarter and 9% year-on-year, as flight patterns originating in the region and going to intra-Asia Pacific destinations rose 5% quarter over quarter, said a new study by American Express Asia Pacific.

Kurt Knackstedt, head of Advisory Services for American Express BusinessTravel, Japan, Asia Pacific and Australia said, "Economic pressures and the simple equation of supply and demand continue to force base airfares up, meaning corporations have to act smartly to keep travel budgets in check."

In Australia all fare types saw price increases ranging from 2% to 3% each quarter with Domestic fares up 4% from the last quarter. The robust movement in this market permits discount in the Domestic Economy fares to increase 13% yearly.

In China, fares to Europe are climbing 27% every year although domestically the market remains mostly unaffected with only Hong Kong demonstrating a strong upward trend in premium traffic, with business class up 9% and first class up 14% annually.

The aviation industry of India continues its boom with business class fare up 7% from the previous quarter and full economy fare up 6%. Fares to intra-Asia Pacific destinations are up 9% quarterly and although fares to the Americas were largely unchanged this quarter, the report found a large 32% yearly increase for this destination has been observed.

Japan rebounded back from a flat first quarter experiencing some of the largest increases of any country in Asia at 11%. Full Business class was up 13% over the previous quarter and full Economy up by 10%. The Japanese domestic routes saw a slight increase of 4% this quarter, though fares to Intra Asia Pacific destinations and the Americas both increased by 14%.

Singapore has seen last quarter's slowdown replaced with an increase of between 3% to 4% across the board on most fare types. Kurt Knackstedt explains that Singapore remains an extremely robust market. If an economy long haul to European destinations and can be booked early substantial savings can be made with a 10% drop in economy discount fares over the last quarter.

The increasing air fares may be the catalyst for corporate travel buyers to crack down on maverick buyers in this department and force them to adhere more closely to corporate travel policies.

"One outcome of rising airfares is that many companies are finally putting greater emphasis on encouraging and promoting traveler compliance with corporate travel policies," Knackstedt said. "On average 20% of travel and entertainment spend is out of policy so this represents a huge opportunity for corporations to regain control of their purse strings."

The American Express Business Travel Monitor, Asia Pacific tracks a constant route of round trip airfares, originating in the Asia-Pacific region paring up more than 370 cities throughout the world.