Airfares … up, up & away - Brief Article

Business Asia, August, 2000

You may be in for a nasty surprise if you are booking business travel tickets across the Asia-Pacific region. Prices are on the rise in all countries

IF YOU are planning to catch a plane from an Asia-Pacific country, be prepared to loosen your purse strings in coming months.

Airfares originating in the Asia-Pacific region have climbed 4.3 per cent on average in the second quarter of 2000, after staying flat for the previous two quarters.

The American Express Asia-Pacific Airfare Index also notes that fares look set to climb further in the second half-year. American Express says higher fuel costs and local factors drove fares up 4.7 per cent in business class, 4.5 per cent in first class and 3.6 per cent in economy, respectively.

The rise tracked in the last quarter was the "biggest single-quarter increase" since AmEx started tracking Asia-Pacific airfares in 1996.

"The last time we saw a substantial jump in airfares was at the beginning of the Asian economic crisis," says Eric Meierhans, director at American Express Consulting. "Fuel costs rose continuously for almost a year to March and since then, have remained high."

High demand for flights has allowed airlines to pass the higher cost of fuel on to customers in the form of higher fares, Meierhans says, adding that "this picture is consistent around the region".

The consulting group says next quarter should see more fare increases, particularly in Australia, where a 10 per cent goods and services tax kicked in on July 1.

This should push up domestic air prices another 7.5 per cent in Australia, the consultants claim.

Singapore has seen substantial increases in first and business classes, up 4.5 per cent and 6.7 per cent respectively. Economy prices have risen moderately, by 2.5 per cent.

This compares with airfare increases of 22 per cent in the last quarter from Pakistan, which registered the highest increase of all countries surveyed, Meierhans said.

Describing the increases in the region as not unexpected, he says "the current situation was one we foresaw at the beginning of the year".

"Fuel costs rose continuously for almost a year to March and, since then, have remained high," he says.

"At the same time, we see high load factors and strong demand, which are allowing airlines to increase fares, passing along their increased costs for fuel. This picture is consistent around the region."

Based on the figures for the past three years, business class fares have climbed the fastest, increasing 14.9 per cent during that period.

First class fares have risen 13.6 per cent, while economy fares jumped 9 per cent during that same period.

The index surveys 947 published airfares in the region and covers 11 places, including Australia, Hong Kong, China, Japan, Malaysia and Singapore.

How your country fares

AUSTRALIA

Expect big increases because of the new goods and services tax. Domestic air fares should rise by 7.5 per cent.

HONG KONG

Following dramatic price rises in the third quarter of 1999, Hong Kong fares rose 3.6 per cent (business) and 2.2 per cent (economy) during the last quarter. The inflation rate for the same period was -5 per cent.

INDIA

Business class tickets rose 6.2 per cent in the last quarter, with economy fares jumping 6.6 per cent. Year on year, prices have risen 16.3 per cent in first class and 15.9 per cent in business class. The annual inflation rate is 4.8 per cent.

INDONESIA

Airfares recorded no increase over a 12-month period before increasing 2.9 per cent (first class) and 2.8 per cent (business class) in the last quarter.

JAPAN

Year on year, business class fares are up 3 per cent, and economy 2.8 per cent.

MALAYSIA

After dramatic rises in the third quarter, airfares have again risen substantially -- up 6.1 per cent in all classes. Year on year, figures jumped 13.5 per cent across all classes against an inflation rate of 1.5 per cent.

SINGAPORE

Singapore has seen fares rise 4.5 per cent in first class and 6.7 per cent in business class. Economy fares are up by 2.5 per cent.

TAIWAN

After a flat first quarter, airfares from Taiwan rose 5.7 per cent in first class, 5.9 per cent in business class, and 4.3 per cent in economy. In the past year, premium classes jumped 8 per cent.

THAILAND

After a year of stability, airfares originating in Thailand have risen 7.7 per cent in first and business classes, and 5.2 per cent in economy.

TRAVEL NOTES

PUTTING WOMEN IN THE PICTURE

Worldroom.com has added a new channel to its business travel portal to cater especially for female executive travellers.

Worldroom.com executive vice-president Tina Nepomuceno-Di Cicco, says: "Female executives make up about 25 per cent of business travellers in Asia alone. While "Women'sWorld" will be available to anyone with internet access, our unique network of guest rooms in some 170 hotels worldwide will give us an unprecedented opportunity to serve women business travellers."

She says the information has been culled from the business travellers' experiences. For example, the site tells you that The Four Seasons hotel in Singapore offers bathrobes for women that are shorter in length and narrower across the shoulders. The channel also features management issues and book reviews. www.worldroom.com