Financial Crisis Lowers Asia Airfares For U.S. Buyers

<B> Financial Crisis Lowers Asia Airfares For U.S. Buyers</B>

By Jenny Burns

For U.S. buyers, the Asian economic crisis has prompted a 12-14 percent decrease in air fares over the past year, according to the American Express Asia Pacific Airfare Index.

The survey found that although some fares actually have increased when priced in local currencies, when translated into U.S. dollars, they fell considerably. In Thailand, for example ticket prices have jumped about 4 percent over last year's costs in the local currency, but in US dollars they lost ground by 44 percent.

Asia/Pacific-based business travelers continue to pay as much or more than they did 12 months ago, with any substantial discounting of fares targeted mainly at the leisure market.

American Express head of supplier relations Mike Thompsonsaid the research found that airlines were holding fares stable in the local currencies despite the currency crisis.

"Airlines around the region are facing significant increases in their costs when measured in local currency because fuel prices and debt are usually denominated in U.S. dollars," he said. "Instead of passing those higher costs on to their customers, at this stage the airlines are absorbing the increases. This is probably because of the increased competition between airlines resulting from the economic crisis. While this is welcome news for consumers, if airlines continue to absorb these costs for an extended period of time, it could have a serious adverse impact on their profitability."

The index found that business class fares on routes originating in the Asia Pacific region to destinations in Australasia have increased by 15 percent in the past three years with three percentage points of this increase occurring in the past year.

The first class fare index has not increased in the past 12 months. Airfares on the routes originating in Asia/Pacific with destinations in North Asia have shown little variation between fare classes and low overall increases.

Average fares to North Asia in the premium categories as a whole, however, increased by 7 percent while other fare classes jumped 5-6 percent over the past three years. Airfares to North Asia have changed little in the past few quarters.

Premium ticket prices on intra-regional routes to Southeaast Asia rose about 8 percent over the past three years, with a roughly 6 percent jump in economy fares. All of the increases in business class fares occurred in 1995 and 1996 and these fares have been flat ever since. Airfares on routes to the Americas have been the most contained.

Premium fares have only increased 3.5 to 4.5 percent in the past three years. Discount economy and lower peak season excursion fares to the Americas are lower then they were three years ago.