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Air fares which rose sharply in the first quarter because of high oil prices, are now falling because of weakening demand, American Express said
Its latest Business Travel Monitor for the EMEA region, said in the second quarter of 2008, economy lowest fares dropped by just over 11% on domestic and short haul routes and by 26.6% on long hauls services to Latin America and the Caribbean.
In the first quarter economy lowest fares had risen by 7% on domestic and short haul and by 29% to Latin America and 15.5% to North America.
Joakim Johansson, American Express Business Travel EMEA's vp advisory services, said: "Trading conditions for airlines have become increasingly difficult in the first half of the year, and 24 airlines filed for bankruptcy in the period, just under half of which were based in Europe.
"While prices have fluctuated in Economy class throughout Europe, fares in other classes, on average, have remained relatively stable.
"This is despite the pressures in the industry and the impact of Open Skies driving down Business Class fares significantly on certain key routes."
The Monitor said the start of the Open Skies deal between the US and the EU had seen a drop in fares.
Average business class fares on routes with new competition decreased.
Fares from London to Newark fell by 25%, to JFK by 24%, to Los Angeles and Seattle by 9%.
Amex said its Monitor showed that hotels prices were stabilising and even decreasing in some countries.
Average daily rates in the first quarter showed an average increase of 6.9% in 41 of the 48 rates reviewed.
But the second quarter showed that 30 of the 48 rates reviewed dropped by an average 3.6%.
Paris showed the largest drop of 37% with Rome showing a 30%.
It said the affects of the downturn hit cities like London, Frankfurt, Edinburgh and Geneva which also all saw a drop in their average daily rates.
Karen Penney, vp business solutions for American Express Global Commercial Card, said: "The European hotel market is entering a new phase, with slower demand and lower rates.
"After years of strong growth, our analysis shows that rates paid by American Express customers are decreasing in many core European destination cities."
"Particularly we notice that the financial sector downturn is making itself felt, with hotel rates decreasing in most European finance centres, such as London, Frankfurt, Paris, Geneva and Edinburgh."