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Business Airfares May Edge Up in 2013, American Express Reports

Thursday, 18 Oct 2012 08:26 AM

Pricing for business travel by air may increase “modestly” next year as slowing growth in China and global economic uncertainty temper price gains in emerging markets, such as India and Brazil, American Express Global Business Travel said.

Business travel pricing in China, the world’s second- biggest economy, is expected to be “flat to slightly down,” hampered by the European debt crisis, declining exports and slowing construction and manufacturing sectors, according to the American Express Co. unit, which helps manage corporate travel accounts.

“All of these factors result in declines in business travel,” said Herve Sedky, a senior vice president of the unit, in a telephone interview. “That was a surprise from our perspective. China traditionally has had much stronger growth, growth that is a lot more similar to India.”

The International Monetary Fund last week reduced its estimate for China’s growth this year to 7.8 percent, which would be the weakest pace since 1999, as Europe’s debt crisis crimps exports. Fares in emerging economies, such as parts of Latin America, Asia and Eastern Europe, will see increases amid strong business travel demand, the report said.

Long-haul economy fares in Russia are expected to increase 5 percent to 7 percent, while similar prices in Latin America are expected to increase by as much as 8 percent. Long-haul business fares in Latin America are expected to rise 4 percent to 7 percent, while short-haul business pricing may rise 3 percent to 6 percent.

Financial Crisis

Leading growth in the Asia Pacific region, India is expected to see fare increases of up to 8 percent, largely due to volatility in the country’s air industry. In China, domestic economy and business flight prices will also be squeezed amid competition from high-speed rail, American Express said.

Economies hit hard by the European financial crisis will probably see declines in fares, the report stated. Prices for long-haul economy flights to Spain are expected to fall 5 percent to 8 percent.

Long-haul economy pricing in North America is projected to range from minus 1 percent to a gain of 2 percent, while the short-haul equivalent is expected to increase 2 percent to 4 percent as airlines adjust capacity in certain markets. Business-class air fares for both short-and long-haul routes are expected to rise 1 percent to 3 percent.

“That change in capacity has a fairly big impact on pricing because it’s based on supply and demand and competition,” Sedky said.

Rates for “upper-range” hotels in North America will grow 4 percent to 9 percent, while overall growth in Latin America hotel rates are expected to increase in the mid-single digits, mostly from Brazil and Argentina, the report said.


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Pricing for business travel by air may increase modestly next year as slowing growth in China and global economic uncertainty temper price gains in emerging markets, such as India and Brazil, American Express Global Business Travel said.Business travel pricing in China,...
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2012-26-18
Thursday, 18 Oct 2012 08:26 AM
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