Amex monitor reports 5% Australian domestic fare hikes driven by strength of resources sector

Issues & Trends – August 2012

Amex monitor reports 5% Australian domestic fare hikes
driven by strength of resources sector

ON average, fare types in Australia increased two per cent in the three months to the end of June, largely buoyed by strong demand for domestic travel, according to the latest American Express Business Travel Monitor.

“In line with regional fare performance, intra-Asia fares were flat across all fare types in Australia last quarter, as were fares to the Americas. Fares to Europe, the Middle East and Africa (EMEA) decreased one per cent,” said the head of American Express advisory services for Asia Pacific Dr Carl Jones.

“The continued demand for domestic travel in Australia is being sustained by the resources sector which is why we have seen domestic fares increase five per cent over the last quarter.

“We haven’t yet seen the impact that increased capacity from local carriers has had on domestic airfares and it will be interesting to see how domestic fares perform in the last two quarters of the year.”

He added: “The fact that Australian businesses continue to focus on local market activities also contributed to sustained fare increases.”

Despite slight fare increases for travel to Europe, EMEA fares fell one per cent in the last quarter “largely because foreign carriers are increasing their presence in the Australian market place, helping to keep fares to this region in check”, according to Jones.

The American Express Business Travel Monitor tracks a constant set of round trip airfares, all originating in the Asia Pacific region with destinations throughout the world.

More than 370 city pairs are included. Each city pair is weighted according to usage patterns by business travellers (as per the American Express Business Travel database).

A high demand city pair such as Melbourne-Sydney has a higher weighting than, say, Perth-Sydney when determining overall changes to Australian domestic airfares.

Airfares are grouped according to four types: full business; discounted business; full economy; and discounted economy. The average of the published fares is intended to provide a guideline of published fare trends.

The company says that the key function of the monitor is to measure percentage changes over time which can then be used by companies as a benchmark against which to compare
their own average ticket prices.

Jones singled out domestic fare rises in Australia and India for their impact on overall fare performance for the Asia Pacific region.

“The strong performance of domestic airfares in these markets has made a significant contribution to the three per cent increase in airfares in the region last quarter,” he said.

He said that intra-Asia fares remain flat despite continued demand.

“The introduction of new low cost carriers on intra-Asia routes has meant that these fares have stabilised over the last quarter. In fact, intra-Asia fares have decreased two per cent year on year,” he said .