First-quarter ticket prices for air travel within North America rose by an average of 6% year over year, while intra-Europe prices increased 5.8%, according to an analysis of ARC, OAG and internal Expedia data by Egencia for an annual global benchmarking report.
"Clearly airlines are doing a better job of capacity control," said Chris Vukelich, Egencia Americas' vice president of supplier relations.
First-quarter average ticket prices rose the most at 12.5% to $452 in Minneapolis, followed by 11.4% in Atlanta to $364. There, the jump is likely due to the "disappearance of a low-cost carrier (AirTran) in the market. If you look at Minneapolis, there's also further consolidation going on there," Vukelich said.
Atlanta and Minneapolis had the only double-digit increases in North America, he added.
While oil prices recently have dropped, Vukelich noted that higher fuel prices earlier this year and a limited increase in supply prompted the airfare hikes.
"We started to see a little flattening of the average ticket price increases [in the second quarter]," he said. "Oil is the key behind all of this. When oil spikes up, airfares go up."
Denver travelers enjoyed the lowest average ticket price in North America at $328, still 4.2% higher than a year ago. Montreal's average fares were the highest in North America at $695, up 7.1%.
Air travelers who departed from San Francisco in the quarter saw their average ticket price decline by 0.8% to $376, according to the analysis.
Prices for travel from North America to "European and Asia-Pac destinations saw sharp decreases in average ticket prices, including Paris (down 19% to $629), Hong Kong (down 14% to $910) and London (down 13% to $588)," according to the report.
Rising prices in Europe
Average prices for intra-Europe travel rose 5.8% as compared to a year ago, when average prices decreased 8% from 2010.
Costs rose the most (15.2%) for those traveling from Amsterdam, where the average ticket price was 238 euros, followed by Barcelona, where the average grew 13.5% to 194 euros.
While the average cost declined 0.1% in Moscow, the average ticket price was the highest for intra-Europe travel at 423 euros.
"Stockholm and Paris saw larger decreases in air ticket prices, down 12.4% and 9.7%, respectively," according to Egencia. "Paris may be down due to higher competition, especially from rail. Travelers might be using train services more often since the connection to Paris is very well developed, cheaper and less stressful for travelers."
From Europe, fares to Los Angeles declined 16% while those to Chicago dropped 11%. Fares to New York and San Francisco each dropped 4%.
In the Asia-Pacific region, the average ticket price was up 3% as compared with a year ago, but prices fluctuated by market.
For example, travel from Bangkok was up 17% and from Beijing up 12.5%, while travel from Tokyo was down 11% and from Taipei down 6.1%.
"Low-cost carriers are continuing their expansive presence on domestic and international routes while incumbent major carriers face losing market share. For some intra-APAC, mid-haul routes, a decrease in business-class uptake is also contributing to decreases in average ticket prices," the report stated.
Hotel ADR Up 6% In North America
Hotel average daily rates (ADR) in the first quarter rose an average of 6% in North America, with the largest increases in San Francisco, up nearly 14% to $154, and Boston, up 6.4% to an average of $158. Dallas' ADR declined 7% to $97.
Egencia analyzed Smith Travel Research and its own leisure and corporate business rates combined for the hotel rates and percentage increases.
"We have seen clients tighten their belts this year and shift more of their negotiated hotel volume into three stars and below," according to Egencia North America hotels director Steve Peterman. Some travelers have opted for airport hotels to avoid the higher downtown hotel rates in Manhattan, Chicago, San Francisco and Los Angeles, he said.
The average daily rate rose 3.3% in Europe and 5.7% in Asia-Pacific. In Europe, the biggest increases were noted in Stockholm, where the average rose 9.2% to 123 euros, followed by Dublin's 6.5% increase to 81 euros.
"Given all of the economic uncertainty over the past year, the hotel segment in Europe seems healthy, although of all three 'super regions,' it appeared to have the weakest growth," according to Egencia.
Average hotel rates in Jakarta rose nearly 24% to $122, still among one of the lowest ADRs in the region; 15.4% in Seoul to $162; and 12.4% in Hong Kong to $214. Despite rising domestic demand and no new supply, rates in Australia remained flat and prices in India are down.
In line with other recent reports, Egencia said car rental rates fell 2.4% in the quarter "due primarily to a highly competitive marketplace and abundance of supply."
Given the price increases, Egencia's Vukelich said, he wasn't too surprised to see that 77% of 300 buyers surveyed in April cited "cost control/reducing expenses" as the greatest challenge for their travel program. In that survey, 62% of global buyers said they planned to "negotiate more in 2012," up sharply from the 38% who so responded a year ago.
For those interested in airline discounts, Vukelich advised, "You're going to have to deliver incrementally. If you talk to most travel negotiators, it's more performance-driven. That also ties together with your ability to create a policy and enforce it."
For the remainder of 2012, 43% of buyers surveyed said they expected trip volumes to increase and 46% expected travel spending to increase.
Source: Business Travel News