NBTA Forecasts Steep Rise In Domestic Airfares

The National Business Travel Association today released a 2009 industry forecast that projects significant rises in average airfares next year, which would propel average U.S. airfares to their highest level since early 2001. While NBTA expects the industry to feel the onslaught of broad airline capacity reductions, uncertain oil prices and less competition on some routes, it expects smaller increases in average hotel and daily car rental rates.

NBTA projects airfares to rise 7 percent to 10 percent, with ancillary fees potentially adding 5 percent to base airfares. The increase would push the average U.S. domestic airfare to $354.00 in the first quarter of 2009—the highest point since it reached $347.74 in the first quarter of 2001, according to the U.S. Bureau of Transportation Statistics. NBTA also said average international airfares would near $2,100, with a decline of 7 percentage points on fares of more than $5,000 as a "result of cutbacks on business class spend by corporate accounts."

NBTA forecasts average U.S. daily hotel rates to increase by 1 percent to 4 percent, to $130, and average daily car rental rates to rise 1 percent to 3 percent to $44.

Last month, NBTA released results of a survey of 230 travel buyers on the impact of the economic downturn to their travel programs, in which more than half of respondents said their companies had implemented cost-cutting measures in the past several months in response to high fuel prices and the volatile economy. The survey showed that, on average, a domestic business trip costs $140 to $175 more than last year and international trips are up $315 to $400.

One of the notable cost-saving attempts being implemented by surveyed travel buyers is increasing the use of low-cost carriers. Sixty-four percent of respondents are "encouraging bookings on LCCs if it means savings on airfares." There also are an increasing number of preferred air programs that blend LCCs into the legacy preferred carrier mix, with 40 percent of respondents having this configuration.