Amex Finds Decline In Q2 Airfares, Room Rates

Average airfares for the second quarter of 2002 dropped by 12 percent year over year, thanks to greater use of leisure fares by business travelers and a 22 percent decline in the cost of the leisure fares themselves, according to findings released today by American Express' Business Travel Monitor.

While leisure fares dropped--for example, the lowest discount airfare stood at an average $93 one way--business fares remained stable. The lowest economy fare available to business travelers, with slight restrictions, was $571 one way, only 1 percent less than the first quarter of 2002 or 2001's second quarter. Amex said the fare disparity between the two traveling groups has widened from two and a half times in 1996 to six times this year.

Brian Mogler, vice president of supplier relations and consulting for Amex Corporate Travel, called corporations' new approach to airline ticket purchasing "a sea change in the way American business buys travel services."

Amex corporate travel customers in Q2 booked 88 percent of their total tickets as discount coach tickets, while full coach tickets fell 3 percent to 9 percent of total sales. The average fare paid by corporate customers was only 50 percent of the typical business fare cited by Amex.

The Air Transport Association last month found that early ticket prices in the third quarter continued to drop. ATA reported that average domestic airfares in July were down 9.1 percent, while average international airfares were down 1.3 percent. These price levels now are comparable to 1988 levels, according to ATA.

On the hotel side, the average booked rate for a domestic hotel in Q2 fell 4 percent year over year, to $128. In top U.S. markets, booked rates fell more noticeably. Deluxe properties slashed 7 percent off rates, while upscale and economy properties dropped 11 percent. Midprice and budget hotels fell 9 percent and 8 percent, respectively. San Jose and San Francisco saw the largest year over year declines of 17 percent and 10 percent, respectively. However, rates in several top markets rose over the first quarter, including Boston, Chicago, New York and Seattle, according to Amex.

Car rental rates in Q2 actually rose year over year by 2.5 percent, though Amex said some rental firms are passing on airport fees and municipal surcharges to travelers, further affecting rental costs.