A continued steady revival of the global business travel industry is predicted in the American Express Business Travel Forecast for 2005. According to Amex's figures Europe at the vanguard of the recovery.
The forecast indicates that in Europe price increases on international business class will rise by 2-4%, hotel prices in both mid- and upper-range properties by 1-3%.
It is only in short haul economy flights, where competition is at its fiercest, that Amex predicts a possible fall in prices of up to 3%.
The figures compare favourably with other regions of the world where Amex predicts price increases will be on a par with Europe or higher.
Recovery in Europe
The report suggests that Europe has recovered well from SARS and The report suggests that Europe has recovered wewll from SARS and the Iraqi conflict and that airlines have had a resurgence in demand.
Travel managers - at least those that are left â€“ will also be pleased that the stiff competition from the low cost carriers is likely to dampen any attempt by the full service airlines to push up their prices.
The one cloud, from Amex's point of view, is that the “stability of the low cost model in Europe is uncertain.” This is almost certainly due to the sheer number of players entering the European market but it also refer the decision of some low cost operators to provide some level of service, notably in inflight entertainment and, as one industry observer said “to move closer to he full service carriers.”
Matthew Davis, director global consulting services, said: “Economic recovery is fuelling business travel demand around the world, with particularly strong demand between Europe and North America, South America, and across the Pacific.”
One finding likely however to please the legacy carriers is that Amex predicts a rise in inter-continental business class traffic across Europe. In the countries features (see tables), it could go up by as much as 3% in Sweden while in France, Germany and the UK it could rise by as much as 4%.
As this is where carriers like BA, Air France and Lufthansa earn their money, this is likely o to be good news indeed.
But on the opposite picture on short haul, the report comments: “Intense competition in the U.K. and Western Europe, primarily driven by low-fare carriers, will continue to drive down pricing on specific short-haul, domestic and intra-European routes. Competition for market share on these routes will outweigh the impact of rising traffic and load factors in terms of the major network carriers' ability to determine pricing in the short-term.”