November 22, 2004 09:51 PM
Business Airfares, Down 11%, Might Be Lowest Ever
Excerpt: The $217 one-way fare, measured for the July-September period by travel giant American Express, is 11% below the full-year average for 2003, and 16% off the recent peak year of 2001, according to a report to be released this week by American Express unit eClipse Advisors. News Source
Toppled by the rise of discount airlines, the average airfare paid by U.S. business travelers has fallen to what might be its lowest point ever.
The $217 one-way fare, measured for the July-September period by travel giant American Express, is 11% below the full-year average for 2003, and 16% off the recent peak year of 2001, according to a report to be released this week by American Express unit eClipse Advisors.
The figure is the lowest in five years of quarterly tracking, and eClipse's Michael Boult says it's likely the lowest ever on an inflation-adjusted basis. The company tracks fares actually paid by American Express' business-travel customers, who generally pay more than leisure travelers because they buy on shorter notice and seek more amenities. Boult says the data suggest pricing of business travel by airlines is undergoing a fundamental change. "The impact of low-cost carriers is really now taking hold," he says.
And the impact continues. American Airlines, the world's biggest carrier, last week slashed fares at its important Miami hub and adopted a simplified, everyday low-price structure for South Florida flights. In doing so, American mimics the pricing strategy of airlines such as Southwest and AirTran, discounters that have been increasingly successful at wooing business travelers from big traditional carriers.
Until recently, Boult said he had been skeptical that low-cost carriers could permanently change what big traditional carriers charge business travelers and how they structure their prices. No longer, he says. Philadelphia exemplifies the effects of the discounters, he says.
Discount king Southwest began operating there in May. Southwest has only 41 flights a day from Philadelphia to a handful of cities. Dominant US Airways has more than 300 daily flights from Philadelphia to dozens of cities. It lowered business fares on routes where it competes head to head with Southwest. But, to keep loyal customers happy, it also had to cut business fares on other Philadelphia routes as well.
Boult says the same effect is now seen in the data from most of the nation's big business travel air markets.
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