Fliers buy fewer premium seatsby Dan Reed on Aug. 25, 2008, under Edge
Many travelers are fleeing airlines’ premium-seat sections as corporations and entrepreneurs react to higher fares and a stumbling economy, says one of the world’s biggest travel agencies in a report out today.
On international flights, the number of business-class tickets American Express sold dropped 2 percentage points in the second quarter, says Herve Sedky, vice president of global advisory services at American Express Business Travel.
Business-class tickets were 49 percent of the international tickets sold by American Express, down from 51 percent in the same period in 2007.
American Express’ quarterly AmEx Business Travel Monitor shows that in the second quarter of this year, 3 percent of the tickets sold for travel within North America were first-class tickets. That’s down from 4 percent in the second quarter last year.
Business travelers who paid the premium price for a first-class ticket on domestic flights in 2007 opted to save money — typically $400 to $800 — this year by traveling in coach.
The cost savings is much larger for travelers who buy coach fares, instead of first- or business-class fares, on international flights, Sedky says.
International first-class tickets typically cost $5,000 to $7,000 round trip, while international business-class tickets cost $3,000 to $5,000, depending on the route and length of flight.
Coach tickets on such routes typically cost $1,000 to $2,000, depending on flight length, and sometimes even less, he said.
“Companies aren’t putting an end to air travel,” Sedky says, but are asking how they can gain market share by making a trip.
Air travel price-tracker Bob Harrell at Harrell Associates says the question of whether higher fares will cut even more deeply into business travel demand will take center stage this fall.
Airlines have announced large capacity cuts, starting after Labor Day and deepening in October and November. Fewer seats would help airlines charge higher average fares.
“October is the single-biggest month of the year for business travel,” Harrell says. “It’s got 31 days, no major holidays, and it’s a busy month for business people trying to wrap up big sales deals for the end of the year. … I think business travelers will keep on flying, while trying to economize as much as they can, but we’re going into new territory.”
International fares rise 11 percent
Average international one-way airfares paid by American Express clients in the second quarter of each year:
2007 … $1,788
2008 … $1,980
Source: American Express