Business travellers downgrading but still flying

According to Carlson Wagonlit’s inaugural Business Travel Watch survey, business class fares between London and Paris increased by 6.22% year-on-year during the first half of 2003, while economy fares on the same route dropped by 8.72%.
The Business Travel Watch, which will be released quarterly, compares business and economy class fares on ten selected city pairs. CWT said the most marked increase in fares from 2002 levels was seen between London and Moscow, where business class jumped by 12.8% and economy by 14.49%. In fact, London-Moscow was the only route of the ten where economy fares increased.
Business class fares on the London-Madrid route, meanwhile, rose by 2.9% year-on-year, but economy fares plunged by 27.75%, following an increase in services by budget airlines. Other routes witnessing big decreases in economy fares were Frankfurt-London (-32.8%), London-Milan (-32.21%) and Copenhagen-London (-23.03%), all of which are served by Ryanair.
In terms of the class of travel chosen for long-haul flights during the first two quarters of 2003, there was a dramatic rise in the popularity of premium economy, which saw overall bookings increase by 57.24% year-on-year and by 64.79% on North Atlantic services alone.
During the same period, use of first class on long-haul routes overall dropped by 0.96% but increased by 6.29% on the North Atlantic. Business class declined by 7.86% overall and by 5.38% on the North Atlantic and economy dropped by 9.32% overall and by 10.01% on the North Atlantic.
CWT said the migration down from business class to premium economy indicated airlines would have seen a reduction in yields. However, the total number of transaction across all routes and classes in the first half of 2003 showed an increase of 0.15% to 1,311,043 from the corresponding period of last year.
Commenting on the report, Jim Tweedie, executive vice president North Europe for CWT, said: ‘The cost of tickets coming down, with some exceptions on certain routes - and generally those with less competition - is a clear sign that the airlines have recognised just how price sensitive travellers have become. It also illustrates just how competitive the market is right now.
‘The migration down from one class of travel to a lower one is another sign currently of how prudent and conservative businesses are. However, the increase in the number of total transactions is a welcome indication of the buoyancy of the business travel market. It is particularly impressive result considering the war in Iraq and the SARS crisis happened during the period in question.’