Airfares in Asia increase for Fourth Consecutive Quarter

The latest American Express Airfare Index for the Asia Pacific region released today reveals increases in airfares on many routes particularly those from Australia, Malaysia, Singapore and Thailand. Business Class and Full Economy airfares and to a lesser extent, First Class airfares have continued to increase at a more rapid rate in recent quarters, compared with discounted economy and non-refundable excursion airfares.

According to Robert Tedesco, Head of Consulting Services Japan Asia Pacific Australia at American Express, the Fourth Quarter (Q4) 2004 American Express Asia Pacific Index results show that high oil prices continue to be a major factor in the upward pressure on airfares. Oil prices traded in the range of US$50-US$55 per barrel for most of October 2004 and were still just below US$50 per barrel in early November 2004.

“Airlines partly, though not entirely, reduce their exposure to rising fuel costs by hedging and through long-term contracts. Even so, many airlines in the region have announced temporary fuel surcharges in recent months, while some have incorporated higher fuel costs into their airfares,” he said.

“Separately, the disparity between changes in business type fares and leisure style fares remains a continuing trend of the American Express Airfare Index. This is more reflective of a leisure traveller’s capacity to alter behaviours than the absence of competition. As such the gulf between these fares will continue to widen as long as the majority of businesses favour a conservative policy in relation to fare and carrier selection.”

First Class fares in the Asia Pacific region have increased 0.9% compared to Q3’04, while Business Class airfares have increased 1.3% this quarter. The benchmark Full Economy airfare index also increased considerably, by 1.3% this quarter, while the Discount Economy index increased by a more modest 0.4%.

In Hong Kong, airfares increased only slightly in Q4’04 from Q3’04. Year-on-year increases for First Class, Business Class, Full Economy and Discount Economy Class fares were 0.3%, 0.5%, 0.3%, and 0.3% respectively.

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.

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).