AirPlus Gauges Drop In German Air Demand

Transaction figures released this week by the corporate payment services provider AirPlus International show German companies bought 17 percent fewer air tickets in the first half of 2009 versus the first six months of 2008. The cost of the tickets fell even more steeply, down 26 percent, meaning that average ticket price dropped as well. Several more statistics from AirPlus reveal many of the factors that led to the decline in ticket price, including less mileage per trip, less use of business class, more use of low-cost carriers, more advanced booking and increased consolidation of carrier selections.

AirPlus has 20,000 corporate clients in Germany, giving it a share of the corporate payments market of almost 70 percent and therefore making its transaction figures probably the most authoritative available. The figures show that companies that spend more than €10 million annually were the most rigorous in cutting average ticket prices, with transactions down 10 percent but spend down 27 percent. This compares with low spenders, those with less than €500,000 annually, for whom transactions were down 12 percent but spend was down a more modest 21 percent.

For larger spenders, one of the main reasons average prices fell is that the proportion of flights within Germany climbed from 51.3 percent in the first six months of 2008 to 55.9 percent. Germany is far less centralized than other European nations, which explains why domestic itineraries account for more than half of all flights. Trips to the rest of Europe fell from 36.2 percent to exactly one-third, while long-haul journeys dropped from 12.5 percent to 10.8 percent.

German travelers at larger companies also are booking longer in advance for business class tickets, up from 5.7 days last year to 7.8 days this time. However, for economy class, the figure fell marginally from 13.5 days to 13.4 days, following a couple of years of steady growth. For all classes combined, large spenders, at 12.9 days, remained far less disciplined about buying in advance than travelers from small-spending companies, at 18.1 days.

One area where large spenders made dramatic policy changes was the use of premium cabins. In the first half of 2008, these accounted for 18.1 percent of ticket transactions, but this year they plummeted to 10.7 percent. Conversely, use of low-cost carriers increased, accounting for 28 percent of tickets, compared with 19 percent in 2007. This means German big spenders now use budget airlines more than small spenders, for whom usage has grown from 21 percent to 25 percent over the same period.

Another sign of improving discipline is that ticket cancellations dropped from 5 percent to 4 percent since the first half of 2008, while the average number of airlines booked by each client company dropped from 9.2 to 8.6. AirPlus suggested this indicates a greater determination by companies to consolidate and leverage their spend with fewer carriers.