Airfares have taken off in the past two years as travel has recovered. Photo / Supplied
Travel supply and demand for 2023 are predicted to moderate following rapid growth last year, says FCM Consulting.
The Flight Centre business says corporate travel demand remains strong despite mixed economic conditions. The need to secure airline seats and accommodation, and find lower prices, is driving corporate travellers to book online and early.
However, there are signs that airfares are moderating.
General manager of corporate brands, Keeley Alton, said that with more businesspeople travelling, they are looking for ways to save money.
“We’ve noticed in some routes, business class airfares have dropped, and in some cases quite significantly. For example, business class seats from Auckland to Sydney have decreased by 24 per cent in January and February 2023 when compared to the same months in 2019,” she said.
“With more capacity and people booking longer in advance, airfares are becoming more competitive.”
Air travel demand globally this year is forecast to be 85.5 per cent of 2019 levels.
Airlines are working to balance pricing against: the number of seats to offer; traveller demand; and airline operating costs - particularly jet fuel.
After 2022, a year in which there was a significant imbalance between supply and demand, in 2023 air travel will stabilise, with capacity being added in the first half of the year and airfares moderating in the second half.
The quarterly trend report shows how prices have spiralled since 2019 as crimped capacity has been met by surging demand - first as locked-down people wanted to reunite with family and friends, travel for leisure boomed, and then corporates got back on the road.
Analysis by aviation analytics company Cirium showed that globally, the average business class fare increased by $US339 to US$2280 during the pandemic and discounted economy seats went up US$56 to US$506 by the beginning of this year.
Global average business class fares went up by 18 per cent and discount economy prices climbed by 14 per cent. While New Zealand and Australia experienced a lower increase in economy fares (11 per cent), business class fares went up by 18 per cent.
Early forecasts indicate air capacity offered this year will be just 2.5 per cent below 2019 volumes.
So far this year, the region with the highest seat growth has been Asia, with a 12.2 per cent rise, although many countries in the region were among the last to re-open and relax Covid-19 restrictions.
The high global inflation rate of 8.8 per cent last year is predicted to fall to 6.6 per cent in 2023 and 4.3 per cent in 2024.
However, there remains continued pressure on the price of products, utilities, services and the general cost of living.
During January this year, jet fuel prices surged above $US130 a barrel as Chinese flight activity tripled within a month. Jet fuel is now US$95 a barrel.
Globally, domestic seats offered in the first quarter of 2023 rose above levels in the same period in 2019.
Meanwhile, average hotel room rates are climbing steeply. Between the end of last year and the first quarter of 2023, room rates climbed by between 4 per cent and 26 per cent around the world. New Zealand and Australia sat around the middle of the pack.
Globally, hotel occupancy for the quarter was 60.46 per cent, only 4 percentage points below the occupancy levels of 2019. In New Zealand, occupancy was at 86 per cent for the latest quarter.
Average daily car rentals have also soared. The daily rate has risen by 23 per cent in the past year, the report says.
“With continued high demand for car rental, there are two factors which continue to impact travellers in 2023 - high daily rates due to increased supply chain costs and strong demand [and] constrained car availability due to reduced fleet replacement stock and delays in parts and repairs.”
FCM advises travellers to book early to secure a vehicle.
This FCM report uses Cirium aviation schedule data as of April 24, 2023. Airfare pricing variations exclude all taxes. The hotel average room rate (ARR) quoted is the average booked rate using FCM and Flight Centre Travel Group corporate booking data. Variations in rates booked reflect seasonality, supply and demand, booking lead times and variations in exchange rates.
The report uses data from the International Air Transport Association, which says the March quarter ended strongly.
“As traveller expectations build towards the peak Northern Hemisphere summer travel season, airlines are doing their best to meet the desire and need to fly,” said Willie Walsh, the Director-General of international aviation organisation IATA.
“Unfortunately, a lack of capacity means that some of those travellers may be disappointed. Part of this capacity shortfall is attributable to the widely reported labour shortages impacting many parts of the aviation value chain, as well as supply chain issues affecting the aircraft manufacturing sector that is resulting in aircraft delivery delays,” he said.
In its Safety and Risk Playbook, FCM says the concept of care is increasingly extending into the area of health and wellbeing, especially when it comes to stress and mental health. Employees are no longer willing to compromise on their health. If employers don’t address flexibility, balance and wellbeing head-on, their ability to retain key staff is at risk.
It offers seven suggestions:
1. Build in time. Think carefully about flight times, transit times, meeting times and everything in between. Rushing a meeting to catch a flight or train is no fun at all.
2. Prioritise rest. Work trips can be exhausting, so what is your policy around a traveller’s first day back? Are you flexible – or are they rushing back to the office?
3. It might sound obvious, but arrival transport is often the last thing travellers think about. Be a step ahead on ground transport, so they don’t have to stress.
4. Goodbye poky hotel rooms and takeaways; hello comfortable spaces, reliable Wi-Fi and keeping fit, eating well and unwinding. Consider serviced apartments for longer stays.
5. Use data and dashboards to give you the edge. Analyse past, current and future trips, paying careful attention to which travellers are carrying the load.
6. Use tech for a seamless journey. Clear, on-the-go communication is so important when a traveller is out on the road.
7. Allow travellers to add personal days onto the front or back end of their business trip to relax, recharge or explore the destination.
All of Israel’s commercial aircraft were sent outside of the country.