Airfares Increase In Second Quarter 2004
Auckland, 21 July 2004 – The latest American Express Airfare Index for the Asia-Pacific region released today reveals
increases in Business and First Class airfares on a number of routes, particularly those from Australia, Indonesia and
Malaysia. Some modest increases were also recorded on routes from Hong Kong and Taiwan.
According to Kyle Davis, Vice President of Corporate Travel Asia Pacific/ Australia, American Express, the Second
Quarter (Q2) 2004 American Express Asia Pacific Index results highlight several key ingredients currently impacting
fares.
“On the demand side we see companies expanding their sales and operations throughout
Asia Pacific, thereby consuming more units of business travel. On the supply side we see cases of certain airlines
introducing flat bed seating, thereby reducing actual seating capacity on key routes, reducing the quantity of product
on offer. Finally on the cost side we see elevated fuel prices coupled with fewer seats in business class creating
margin exposure. These are three independent forces putting upward pressure on airfares,” said Mr. Davis.
“First and Business Class fares do not appear to be impacted by the growing number of low-cost-carriers around the
region. Any impact in airfares, as a result of low-cost-carrier services, is generally felt in Full Economy and
Restricted Economy fares.”
“We expect these trends to continue in the longer term and envisage all classes but especially First and Business Class
fares to continue increasing through to year-end.”
Fares have increased in all classes with Business and First Class airfares increasing more rapidly than most other
classes of travel this quarter, increasing 0.8% and 0.5% respectively since Q1’04. Full Economy increased 0.2% and
Discount Economy increased 0.3% from last quarter.
Using year on year comparisons, the latest American Express Airfare Index shows the overall index for First Class
airfares in the Asia-Pacific region increased 3.6%, while Business Class airfares increased 3.4%. The Full Economy
airfare index increased slightly, by 0.2%, and all Discount Economy index increased 0.3%. Lowest Peak-Season Excursion
airfares increased by 0.9% and Lowest Off-Season Excursion airfares increased 0.4% in Q2’04 compared with Q1’04.
INDIVIDUAL MARKET RESULTS
Significant changes were recorded in Q2’04 over Q1’04 airfares on routes from Australia, Indonesia, Japan, Malaysia, New
Zealand and Taiwan. Some modest changes in airfares were also recorded on routes from Hong Kong and Singapore. No
significant changes in airfares since the Q1’02 survey were recorded on routes from India, Pakistan and Thailand.
New Zealand – Business Class airfares from New Zealand increased 1.5% in Q2’04
Australia – First Class airfares from Australia increased 1.3% in Q2’04, Business Class airfares from Australia
increased by 2.6% in Q2’04, Full and Discount Economy Airfares increased 0.5% and 0.6%, respectively; Peak Season and
Off Season Excursion airfares increased 2.1% and 2.0%, respectively Year on year increases for First Class, Business
Class and Full Economy Class fares were 7.5%, 7.0%, and 4.2% respectively. Discount Economy airfares show a year on year
decrease of 3.2%.
Indonesia – First Class airfares from Indonesia increased 2.4% in Q2’04, Business Class and Discount Economy airfares
from Indonesia increased 1.6%, Full Economy airfares from Indonesia increased 1.5%.
Year on years shows the following increases: First Class 2.7%; Business Class 6.3%, Full Economy 1.9%; and Discount
Economy 1.9%.
Japan – Peak Season Excursion airfares from Japan increased 3.2% in Q2’04 compared with Q1’04
Year on year shows the following increases: First Class 2.7%; Business Class 3.0%; Full Economy 2.0%; and Discount
Economy 2.0%.
Malaysia – First and Business Class airfares from Malaysia increased 2.6% in Q2’04, Full and Discount Economy airfares
from Malaysia increased 1.9%
Year on year shows the following increases: First Class 12.0%; Business Class 12.0%; Full Economy 6.9%; and Discount
Economy 2.0%
Year on year shows increases in First Class, Full Economy and Discount Economy of 2.9%, 1.5% and 1.5% respectively.
Business Class decreased year on year by 2.3%.
Taiwan –. First and Business Class airfares from Taiwan both increased by 0.5% in Q2’04
Year on year First Class, Business Class, Full Economy and Discount Economy showed decreases of 0.3%, 0.7%, 0.8%, and
1.3% respectively.
India – Airfares were unchanged between Q2’04 and Q1’04 surveys
Year on year show increases as follows: First Class 9.2%; Business Class 6.3%; Full Economy 1.9%; and Discount Economy
1.9%.
Pakistan – Airfares were unchanged between Q2’04 and Q1’04 surveys
Year on years shows increases as follows: First Class 0.3%; Business Class 0.3%; Full Economy 0.3%; and Discount Economy
0.1%.
Thailand - Airfares were unchanged between Q2’04 and Q1’04 surveys
Year on years shows increases as follows: First Class 6.0%; Business Class 5.8%; Full Economy 2.2%; and Discount Economy
2.0%.
Hong Kong – Airfares changed slightly (some increases, and some declines)
Year on year shows increases as follows: First Class 3.1%; Business Class 3.3%; Full Economy 0.4%; and Discount Economy
0.7%.
Singapore - Airfares changed slightly (some increases, and some declines) Year on year shows there has been no change
in First Class, Full Economy or Discount Economy airfares. There has been a year on year decrease in Business Class of
0.4%.
AUSTRALIA DOMESTIC AIRFARES
Peak-season and Off-Season Excursion airfares both increased 2% in Q2’04, compared with Q1’04 (excluding the fuel
surcharge being introduced in June 2004), though remain considerably lower than a year ago. Business Class Airfares
increased slightly by 0.3% in Q2’04. Full and Discount Economy airfares were unchanged tis quarter.
The Qantas low-cost subsidiary JetStar commenced operations on Australian domestic routes from 25 May 2004, which may
not be influencing airfares (in an anticipatory sense) in the Q2’04 survey (which takes readings on 1 April 2004). This
may also be partly due to this survey covering airfares on the major capital city corporate travel routes, whereas
JetStar is operating primarily on leisure routes to Tasmania, northern Queensland, Avalon (Geelong), Gold Coast and
Sunshine Coast.
OIL AND AVIATION JET FUEL PRICES Oil prices, which influence aviation jet fuel prices, have increased considerably in
recent months and this month have been around US$40 (plus) per barrel for several weeks. Many airlines have announced
fuel surcharges ranging from A$5 to A$15 per sector. In addition to the rising price of crude oil, airlines have to
manage the gap, or “Crack” between crude oil and jet fuel prices. Many airlines hedge their purchase of crude oil,
however it still leaves them with the uncertainty of the refining margin. This gap or “Crack” has recently spiked and
while it my ease in the short term, it is forecast to remain above the 6-year historical average for 2005. Even for
airlines with sound hedging for the remainder of 2004, the concern is how they will manage the compounding impact of
high crude and refining costs into 2005.
ABOUT THE INDEX
The American Express Asia Pacific Airfare Index is published every quarter as a guide to airfare changes and trends in
the Asia Pacific region. It is produced exclusively for American Express by Access Economics. It tracks airfare activity
in 165 city-pairs, all originating in the Asia-Pacific region, with destinations throughout the world. The airfares are
surveyed from published airfares available for ticketing from the first day of the quarter.
As well as providing critical analysis of airfare trends in the region, the American Express Asia Pacific Airfare Index
assists organisations to measure and keep track of their performance in terms of business travel expense management.
Each edition of the American Express Asia Pacific Airfare Index measures data across six fare categories including First
Class, Business Class, Full Economy, Discount Economy, Lowest Peak-Season Excursion and Lowest Off-Season Excursion. The
countries covered by the Index are Australia, Hong Kong SAR China, India, Indonesia, Japan, Malaysia, New Zealand,
Pakistan, Singapore, Taiwan and Thailand.
CLASS DEFINITIONS
First Class – The lowest, generally unrestricted first class fare valid for simple itineraries eg a city-pair return
trip.
Business Class – The lowest, generally unrestricted intermediate-class fare valid for simple itineraries. -More-
Full Economy – The lowest, generally unrestricted economy class fare valid for simple itineraries.
Discount Economy – The lowest economy fare generally available to the business traveller. Seats may be limited and an
advance purchase of up to seven days may be required. No minimum stay requirement. A cancellation penalty may apply.
Lowest Peak-Season / Off-Season Excursion – The lowest most restrictive fare valid during peak or low season,
respectively. Fares may require advance purchase, minimum stay, round trip purchase and may carry significant change /
refund penalties. (Peak and low seasons vary between carriers and countries). -
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investment products, insurance and international banking. For more information about American Express, visit the
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