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Amex predicts the future

Posted: 24/11/2008

Airfares are forecast to increase by up to 9% for European businesses, while UK companies may see rises of up to 2%, according to the annual American Express Global Business Travel Forecast. The 2009 Forecast predicts that 2009 prices will be influenced by reduced capacity and reduced competition, with a negative increase in airfares and hotel rates in some markets. The Forecast also highlights that businesses can expect up to an additional 15% added to base fares, as a result of airlines continuing to un-bundle services such as checked luggage and in-flight refreshments and fees for amenities such as aisle seating. Both suppliers and buyers of travel and related services are expected to face new operating challenges in the coming year. The Forecast predicts that the average cost of domestic and international trips for UK businesses will increase again in 2009. This will have a ripple effect in other areas of travel including hotel, car rental and corporate meetings and events. As suppliers adjust to rising operating costs, additional service fees will create new challenges for corporate travel program managers in 2009. The proliferation of baggage and other fees introduced by airlines and capacity reductions will dominate the airfare market in 2009 and create a significant need for companies to establish and clarify new policies for their business travelers. Capacity cuts are likely to lead to a shortage of available seats at lower price points, while changes in ticketing and minimum-stay requirements, uncertainty surrounding the future price of jet fuel, movement in airline consolidation and alliances and tighter controls over contract performance measurement are likely to drive price increases. Prices are predicted to experience downward pressure due to a slowing global economy, improved demand management by corporations and stronger traveler compliance. The expansion of low-cost carriers, more efficient aircraft and airline operations and the continued liberalization of the industry are expected to also mitigate increases. While American Express Business Travel forecast some rate growth in the global hotel industry, most regions will likely experience slight declines in occupancy that will keep rate increases below the level of those seen in 2008. The forecast predicts that many companies will look at alternate forms of travel, such as rail or car versus airline travel in circumstances where these alternatives are viable and can cut costs. This focus on alternative forms of transportation will also support a company's CSR and environmental travel initiatives. To order a copy, visit BusinessTravelConneXion.com.