American Express data shows airfares increased 10% last quarter
New benchmarking report lets travel buyers compare travel cost data
By Susan Avery -- Purchasing, 8/25/2008 7:18:00 PM
According to data from the American Express Business Travel Business Travel Monitor, the second quarter of 2008 marked a seven-year high in average airfare paid by business travelers. Oil prices, capacity constraints and ticketing restrictions drove up airfare 10% year-over-year. Average one-way airfare paid was $260, up $24 from the same period last year. Compared to the first quarter of 2008, the fare was up $27, an increase of 12%.
The Monitor confirmed that high fuel prices, which led many airlines to make capacity reductions and tighten ticketing restrictions, drove average airfare paid higher, motivating companies to strengthen policy compliance strategies when managing travel and entertainment spending.
“External market forces continue to pressure business travel budgets at the same time that high fuel costs push travel prices to new highs,” says Hervé Sedky, vice president and general manager, Global Advisory Services, American Express Business Travel in New York.
“During times when economic conditions are volatile, companies step up efforts to stress the importance of purchasing tickets in advance in order to use discount tickets in a negotiated travel program,” adds Sedky in a press release. “Our data show that during the second quarter of 2008, 89% of tickets purchased were domestic discount coach fares, this shows that more travelers purchased tickets in advance. These subtle changes can translate into significant savings,17% or more in some cases. Looking at the first six months of 2008, the companies that had travelers purchase 8-14 days in advance rather than 0-7 days in advance saved an average of $49 per segment.”
At the same time, average international one-way airfare paid during the second quarter of 2008 set a new record, at its highest level since the inception of the Business Travel Monitor in 1999. With an 11% increase in the second quarter of 2008, over the same period in 2007, international airfares reached nearly $2,000, with a final average of $1,980.
American Express data also show that the percentage of international business class tickets purchased was at the lowest level since the third quarter of 2004 at 49%. Increases in the percentage of tickets purchased in other classes of service show that companies are employing strategies to encourage travelers to trade down to other classes of service.
“As globalization continues to pull business travelers to international destinations, we advise our clients to focus on international travel policy compliance,” says Sedky. “Strategies including encouraging employees to take advantage of corporate discounts negotiated with preferred suppliers and trading down to lower classes of service when appropriate are driving savings for our clients despite the difficult travel market.”
The American Express Business Travel Monitor is a benchmarking service that tracks travel expense categories including published and purchased airfares captured across hundreds of domestic and international routes. Average fare paid is the one-way average paid by all business travelers booked by American Express Business Travel, and includes a variety of fare types, including first class, unrestricted and discount air fares. Typical business airfares are generally the lowest refundable economy fare available to the business traveler.
See: How to control travel costs
See: Travel procurement has role in corporate strategy as companies expand globally
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