NZ biggest Asia-Pac decrease in airfares Q2 2007

NZ records biggest decrease in average airfares for Q2 2007 - American Express Asia Pacific Business Travel Monitor

The American Express Asia Pacific Business Travel Monitor has found that New Zealand recorded the biggest decrease (-3%) in airfares over the March-June 2007 quarter within the Asia Pacific region, led by discount economy fares which fell by 12%. Despite this downward trend for the quarter, airfares had still increased by 6% year-on-year.

Full details of the report, airfare trends across the Asia Pacific region and what is driving them are covered in the media release below.

American Express Business Travel Reports Airfare Upward Trend in Asia Pacific

-- Average airfares across the region increase 2% in Q2 compared flat Q1 --

-- Varied individual market trends confirm complexity of travel Industry in this region --

Auckland, 20 August, 2007 - Airfares across Asia Pacific returned to an upward trend with a 2% increase in the second quarter of 2007 compared to the flat results in the first quarter. The airfare trends were reported by American Express Business Travel in the latest Asia Pacific Business Travel Monitor - the industry's quarterly retrospective pricing benchmark to track airfare trends.

"The growth in airfares over the second quarter is driven by ongoing increased demand from both leisure and business travellers, reflecting the ongoing positive economic environment in the region. As a result, the Asia Pacific region tends to demonstrate higher and more consistent profitability for its air carriers compared to the European and North American markets, with Asia Pacific carriers demonstrating generally better cost control." said Kurt Knackstedt, Head of American Express Business Travel Advisory Services and Field Effectiveness for Japan, Asia Pacific and Australia.

Destination trends: US routes continue to gain, but Intra Pacific routes grew fastest over the quarter

Intra Pacific routes saw the strongest increase for the quarter at 3%, however routes to the Americas continued to see the greatest long-term growth increasing 6% year-on-year, reflecting strong demand on those routes.

Individual market trends: Complex region with strong individual market characteristics

"The American Express Business Travel Monitor confirms that the Asia Pacific region is not a simple homogeneous market - it is made up of many markets - each with unique characteristics in terms of the level of competition, the preference for economy or premium services and the most popular destinations," said Kurt.

"For example, in China full and discount economy fares saw the strongest increase for the quarter, largely driven by routes to the Americas which increased by 18% and 19% respectively. This is most likely a result of increased focus by airline yield managers to maximise revenues on popular fare types like these.

"Conversely, in Hong Kong the greatest increase was in full first class fares (6%) and full business class fares (5%) as this is where the business traffic is focussed - partly because Hong Kong business travellers have remained loyal to non-stop flights, as well as significant increases in premium fares to the Americas which grew by 20% for full first and 26% for full business fares over the quarter," explained Kurt.

Australia recorded an average increase of only 1% for the quarter, however domestic full economy fares spiked by 9%. "The increase in domestic full economy fares in Australia reflects Qantas' and Virgin Blue's continued investment at the top end of the market to differentiate its product from low cost carriers. This increase is likely to flow through to the business travel sector as corporate negotiated fares are pegged to the published equivalent," said Kurt.

In India published airfares were down 1% compared to both the previous quarter and year. "While domestic fares fell by 2% for the quarter, Intra Asia Pacific routes saw a steady increase of 4% driven by both increasingly mobile leisure travellers and business travellers working across the region," Kurt added.

In Japan, airfares increased by an average of 5% across all fare types compared to the previous quarter. The strongest increases were in full first class (7%) and discount business class (8%). As with other markets, fares to the Americas tended to be higher than other regions again demonstrating the demand on these key routes, particularly for business travellers.

Malaysia recorded a 7% increase for the quarter across all fare types. The biggest increases were on routes to Europe (10%) and intra Asia Pacific (9%). "This is an important year for Malaysian Airlines as it rationalises routes," said Kurt.

New Zealand recorded the biggest decrease (-3%) in airfares over the quarter within the Asia Pacific region, led by discount economy fares which fell by 12%. Despite this downward trend for the quarter, airfares had still increased by 6% year-on-year.

Singapore was the only market to remain flat for the quarter when averaged across all fares. However, there was great variety between fare types with full first class and full business class fares both increasing by 4% and full economy decreasing by 15%. "The increase in first and full class fares was driven by the high demand in this market as well as due to the introduction of Singapore Airlines' new premium cabin products. These increases also support the plans by carriers to remove seats from economy in favour of premium products with the introduction of the Airbus 380 mega liner, which Singapore Airlines plans to introduce in October. Meanwhile, the drop in economy fares reflects increased competition on key routes to the US and India," explained Kurt.

Potential Savings Through Insights and Benchmarking

The American Express Business Travel Monitor identifies trends in airfares within and from Asia Pacific. It is designed for companies to compare the changes in their expenditure against the average published market fare.

American Express Business Travel Advisory Services leverages the world's largest corporate travel data repository and takes full advantage of American Express' unique position as the world's only fully integrated travel, purchasing and payment program provider. The consulting team of subject matter experts provides insight into policy management, strategic sourcing and business intelligence, enabling clients to optimise their investment in travel.

Methodology

The American Express Business Travel Monitor, Asia Pacific tracks a constant set of round trip airfares, all originating in the Asia Pacific region with destinations throughout the world. More than 370 city pairs are included. Each city pair is weighted according to usage patterns by business travellers (as per the American Express Business Travel database). A high demand city pair such as Melbourne-Sydney will have a higher weighting than Perth-Sydney when determining overall changes to Australian domestic airfares. The following 14 countries have been included: Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam.

The second quarter 2007 report tracks data for the quarter ending 30 June 2007.

The American Express Business Travel Monitor, Asia Pacific is available on a subscription basis. Additional detailed reporting at the city pair level is also available from the Advisory Services team.

ENDS

About American Express Business Travel

American Express Business Travel, a division of the American Express Company, is dedicated to helping its clients realise the greatest possible value from their investment in travel through increased cost savings, outstanding customer service and greater spend control. For small businesses, medium-sized enterprises and multinational corporations, American Express Business Travel provides a combination of industry-leading booking technology, travel management consulting expertise, strategic sourcing and supplier negotiation support and customer service available online and offline, around the world.

American Express operates one of the world's largest travel agency networks with more than 2,200 travel service locations in more than 140 countries and territories worldwide. The Company processed US$21.8 billion in global travel sales in 2006.

American Express Company (www.americanexpress.com) is a diversified worldwide travel, financial and network services company founded in 1850. It is a world leader in charge and credit cards, Travellers Cheques, travel, business services and international banking.

© Scoop Media