First signs of stabilisation in airfare prices around Asia Pacific

Following widespread airfare increases over the past 18-month, the fourth quarter of 2002 (Q4 2002) has shown first signs of stabilisation in airfare prices around the Asia Pacific region, according to a recent American Express Asia Pacific Airfare Index.

Increases in fares in all classes for the Q4 2002 were between zero and 0.5% depending on class and destination, down from Q3 2002 increases of 1.0 to 1.5%.

While the American Express Asia Pacific Airfare Index survey for Q4 2002 recorded some small increases in airfares on a few routes, most routes recording no change in airfares since the Q3 2002 survey.

Mr Jim Georges, Director, American Express Consulting, Asia Pacific said, "Despite signs of stabilisation, there is potential for volatility in the months to come".

"Cost factors such as rising oil prices, anxiety about Iraq and poor airline profitability may make stability in airfares short lived. Also, recent terrorist attacks in Bali and the Philippines, and associated travel warnings issued by the USA, the UK and Australia, may impact heavily on non-essential travel to some destinations in the Asia-Pacific region".

Within the Asia Pacific region, overall First Class airfares increased 0.1% in Q4 2002, compared to Q3 2002; Business Class, Lowest Peak-Season and Off-Season Excursion airfares increased 0.5% over the same period; and Full and Discount Economy airfares were both unchanged.

In the past 12-month, first class airfares in the Asia-Pacific region increased 2.5% and business class airfares increased 2.8%. Full and discount economy airfares increased 1.8% and 2.0% respectively, and Peak and Off-Season Excursion airfares increased 2.1% and 2.0% respectively.

"While airfare increases have been more subdued in the past few quarters, when you compare First and Business class airfares on most routes in the past three years, prices have hiked 15% to 20%," Mr Georges said.

According to Mr Georges, the most significant increases in airfares this quarter were on several Australian domestic routes. Business Class airfares in Australia have increased 3.6% in Q4 2002 compared with Q3 2002 and several leisure fares also increased.

"The rise in business class airfares on Australian domestic routes relates to the collapse of Ansett in September 2001 which left Qantas with no direct competition in the Australian domestic full service (corporate travel) market. The considerable increase this quarter in leisure airfares on some Australian domestic routes indicates less vigorous price competition in leisure airfares between Qantas and Virgin Blue," Mr Georges said.

  large reduction in Peak and Off-Season Excursion airfares from Kuala Lumpar to London resulted in significant decreases in airfares from all Asia-Pacific countries to Europe and from Malaysia to all destinations. Full and Discount Economy airfares to the Americas both increased moderately by 0.6% in Q4 02. Airfares from most other countries were unchanged, or only changed slightly in the Q4 2002 survey, compared with Q3 2002.

INDIVIDUAL MARKET RESULTS (Quarter over quarter)

Hong Kong - Most fares remained flat this quarter, only First Class increased 0.1%.

Australia - Business Class and Excursion domestic airfares increased 3.6% and 3.8% respectively in Q4 2002 compared with Q3 2002. This may reflect a lessening in competition, but also a more sustainable situation, between Qantas and Virgin Blue now that Impulse and Ansett no longer exist. All levels of fares increased, with dramatic impacts in Business Class (2.7%) and Lowest Peak-Season Excursion (2.8%) and Lowest Off-Season Excursion (2.8%).

New Zealand - Lowest Peak-Season Excursion and Lowest Off-Season Excursion both increased 0.7% and Discount Economy increased 0.2%. Full economy airfares dropped 1.0%, while First Class and Business Class remained flat this quarter.

Malaysia - All fares remained flat this quarter with the exception of the Lowest Peak-Season Excursion and Lowest Off-Season Excursion which dropped 3.8%.

Taiwan - Fares remained flat this quarter.

Thailand - Most fares remained flat this quarter, with the exception of First Class, Discount Economy and Lowest Off-Season Excursion which increased 0.1%.

India - Fares remained flat this quarter.

Indonesia - Fares remained flat this quarter.

Japan - Fares remained flat this quarter.

Pakistan - All levels of fares increased between 0.1% and 0.3%.

Singapore - First Class Fares increased 0.3%, Business Class Fares increased 0.2% and Full Economy and Discount Economy both increased 0.1%. Lowest Peak-Season Excursion and Lowest Off-Season Excursion remained flat this quarter.

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 Airfare Index assists organisations to measure and keep track of their performance in terms of business travel expense management.

Each edition of the 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 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).