The average cost of airline tickets fell in 2003 by 5.4 per cent overall, as the acceptance of low-cost carriers by business travellers increased, according to an annual benchmarking study done by BTI Canada of 150 of its corporate travel clients. The Canadian study also revealed that the average cost of domestic and transborder airline tickets decreased by 9 per cent while international airline ticket costs declined by slightly less than 1 per cent.“Low-fare carriers in the travel market have definitely solidified their presence in the marketplace,” said Michele Ferrari, Senior Vice-President Client Management at BTI Canada. “The acceptance of low-fare carriers by corporate travellers have forced dominant “traditional” airlines to rethink their fare and distribution models, and to continue focusing on maximizing yields instead of adding flights to capacity.”
According to Ferrari, in just one year, low-fare carrier ticket purchases have risen from 7 per cent to account for more than a quarter of airline-flow revenue in Canada.
“Business travellers appear to be considering these low-fare carriers, and are prepared to forego service and schedules for the price and value that these smaller airlines tend to offer,” she said.
BTI Canada’s Benchmarking Study is a semi-annual report that measures corporate travel activity booked by BTI Canada. The study is unique to the Canadian market as key Canadian business travel industry trends are identified and analyzed.
According to the study, the airline industry in Canada experienced considerable change in 2003 as factors like Air Canada’s bankruptcy protection filing and geo-political issues contributed to the fluctuation of ticket pricing, trip lengths and purchasing habits. Ferrari said that concerns about the residual war in Iraq, SARS, the major blackout that swept across the North Eastern Seaboard, ongoing international and transborder terrorism concerns and the Avian Flu all continue to hinder full recovery of the travel industry.
Although domestic travel was high in the first half of 2003, it was the only market segment to decrease overall during the year, and fell by 3 per cent to its lowest level since before 2000.
Study results also showed that the average gap between Self Service Reservations (SSR) and non-SSR bookings decreased through 2003. The average ticket costs for SSR bookings were generally lower, between 1.5 per cent (intra-US) and 11.5 per cent (domestic). Ticket cost savings averaged between $140 and $250.
“As more and more low-cost carriers are introduced into the SSR booking and data capture process, this gap will likely widen by 2004,” Ferrari said.
The study also found that the average overall hotel rate increased by 0.5 per cent from 2002, to $145.09. Domestic hotel rates fluctuated during 2003, as the first half of the year slid 1.2 per cent and the second half rebounded with a 1.6 per cent increase. Overall domestic rates remained status quo at $122.75.
According to Ferrari, a positive economic outlook and increased business travel in the second half of 2003 contributed to overall gains in the hotel sector, as hoteliers raised prices slightly with this increased demand.
Other key study findings include:
—The average overall car rate paid decreased $2.25 (or almost 4.5 per cent) to $49.21 from 2002. Overall, the domestic market accounted for an 11 per cent drop in the average rate paid, which contributed to this sector’s decline.
—Overall average cost per mile decreased to $0.47 from $0.49 in 2002 and $0.51 in 2001.
—The average domestic trip length decreased more than six hours. International stays diminished by approximately 12 hours, whereas intra-US travel increased slightly from 2.14 to 2.18 days.