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September 2022, Virtual
September 29 2022, Virtual
US travel buyers fear that airfares will go up due to the continuing consolidation within the airline industry, according to research by corporate card firm Airplus.
The US aviation market is set to have even fewer major carriers with the impending merger between American Airlines and US Airways which is due to be completed later this year.
The biggest concern for buyers in the US is that this consolidation will lead to higher prices as capacity is reduced with 84.5 per cent saying that this was a major worry.
Other concerns included reduced seat availability (59.2 per cent), less negotiating leverage for domestic deals (54.5 per cent) and the erosion of service due to lower levels of competition.
US buyers are also worried about the impact of consolidation on routes across the Atlantic, which is the most lucrative business travel market in the world. IATA figures show that US -Europe routes represent 22.9 per cent of all premium cabin revenue for the association’s member airlines.
“Buyers are also watching closely as international routes and carriers continue to consolidate,” said Airplus in its report.
“The transatlantic market was of most concern for survey respondents - whether due to the volume of business travel demand for this market or due to the amount of consolidation on transatlantic routes over the past few years.”
As well as the American-US Airways merger, the transatlantic market is set to be affected by the proposed joint venture between Delta and Virgin Atlantic between the UK and the US.
But Airplus’ North American CEO Ron DiLeo said that consolidation would create a more stable aviation market in the US.
“Historically, the initial reaction to airline consolidation is one of fear: prices are going to go up, route access will decrease and service will decline,” said DiLeo.
“However, it is also important to recognise that through these mergers, joint ventures and alliances, airlines are becoming more financially sound and reducing risk, which in turn protects the entire travel marketplace and allows them to better serve their customers.”
Airplus surveyed 119 US-based travel buyers – 50 per cent of whom had control of travel spend of more than $10 million and 24 per cent controlled budgets above $50 million.
For more details on the report, click here