Singapore domestic airfares show no sign of slowing

Economy-discount fare prices grew the most at 9% in 2Q11.

Despite recent volatility in global share markets, airfares in the Asia-Pacific region are continuing their steady trend upwards according to the most recent American Express Business Travel Monitor. Airfares within the region are up three percent in the second quarter of 2011, and four percent higher compared to the same period in 2011.

“Singapore has easy geographic access to all major Asian markets including China and India, hence, we can look forward to greater travelling activities in the region. In addition, local companies are starting to place greater emphasis on strategic management of their business travel program and not only focusing on low cost carriers when travelling”, said Irene See, Vice President and General Manager, ASEAN and Greater China, American Express Global Business Travel.

The Singapore market experienced modest fare changes in the first quarter. Singapore published fares were up one percent. Overall fares to Intra Asia Pacific, Europe, Middle East & Africa rose one percent while fares to Americas were down one percent.

In the second quarter, airfare growth was strong in Singapore for economy-discount fare prices with nine percent increase. Published fares for first-discount class grew four percent while first- full and business-discount classes dipped one percent over the last year. The largest decline of seven percent comes from the economy-full class.

A number of factors are contributing to the decline in fare types. Low-cost carriers played a significant role in airfare pricing in Singapore. The market for low-cost carriers is more mature in Singapore, and LCCs are opening up new routes, forcing the legacy airlines to compete on price for economy fares.

Legacy airlines are also responding to the shifts in demand on intra-Asia traffic to LCCs, and they are taking creative steps to address these shifts, for example by starting their own lower-cost brands or partnering with low-cost competitors.

Rising oil prices and high demand for business travel are the two most important factors behind these increased fare prices, according to Dr. Carl Jones, Head of American Express Advisory Services for the Asia-Pacific region.

“Businesses in Asia are looking to expand and to compete in new markets regionally and around the world, and as a result they are looking to travel more. In fact, we’re seeing double-digit increases in travel spending and frequencies among some of our clients in the region,” said Dr. Jones.

Increasing fares coupled with greater travel frequency can spell trouble for companies who don’t have good policies in place to control their travel spending. Jones continued, “Business travel yields significant returns to a company’s bottom line; however, dramatic increases like what we’re seeing now may cause financial controllers to pause. Companies should address this by working with experienced professionals who can help them source long-term pricing arrangements with travel providers to help them weather these periods of rising prices.”

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