BTM Q4 2003 release.final2
Transcript of BTM Q4 2003 release.final2
Release News Release News Release News Release News
American Express Company American Express Tower World Financial Center New York, N.Y. 10285-4801
-more-
Contact: Melissa Abernathy
(212) 640-5060
Don Munro
(516) 328-7336
FOR IMMEDIATE RELEASE
COMPANIES’ AVERAGE AIRFARES IN 2003 DECLINED TO LOWEST
LEVEL SINCE EARLY 1997, AMERICAN EXPRESS DATA REVEAL
U.S. Firms Took Advantage of 5% Decline in Business Fares in 2003, American
Express® Business Travel Monitor Shows
Pressure From Low-Fare Carriers Prompts Double-Digit Fare Cuts in Some Routes
Published Fares to International Destinations Rise, Yet Companies Still Find Bargains
NEW YORK – March 31, 2004 – Last year, U.S. companies made enormous strides
reducing air travel costs, their largest business travel expense, new data from American
Express reveal.
Companies’ average fares in 2003 dropped to a level not seen in six years, as
airlines cut published business airfares substantially, partly in response to the growing
influence of low-fare carriers, according to the latest data from the American Express
Business Travel Monitor (BTM). The BTM tracks a variety of airfare categories across
hundreds of domestic routes, including companies’ average airfares in those routes.
“After so many years of spiraling business airfares, 2003 has shown us that
companies are making sustained progress buffering their exposure to high travel costs,”
said Lawrence Restiano, Director, American Express Consulting. “To lure the business
traveler back, airlines have cut airfares and introduced new, less restrictive leisure-style
airfares that corporate travelers can use. But one of the biggest benefits to today’s
business traveler has been the response of network carriers to the expansion of low-fare
carriers—and cheaper fares—into new routes.”
Companies’ 2003 Average Airfares Lowest in Years, American Express Data Show
-more-
2
Low-Cost Carriers Affect Typical Business Airfares
In the BTM, the Typical Business fare average for 2003 was $545 one-way, down
5% from 2002. Typical Business airfares are generally the lowest fully refundable
economy fares, with up to three days advance purchase. The BTM has been tracking this
and several other fare categories across 215 domestic routes for more than a decade.
The decline in Typical Business fares during 2003 is more than double the decline
in that fare indicator from 2001-2002 (-2%). Before 2002, there was a nearly
uninterrupted trend of fare increases from early 1996 in the Typical Business category.
The Typical Business fare in December 2003 fell to the lowest point since March 2000.
Across many routes, the entry or expansion of service by low-fare carriers has
forced many airlines to reduce airfares – often substantially, according to BTM data.
“It’s an entirely new, more competitive game in some markets, and the business
traveler and corporate America is benefiting,” added Restiano.
For example, compared to December 2002, the latest Typical Business airfare
plunged 78% in the Newark-San Francisco city pair, while the fare level in the Los
Angeles-New York route decreased 47%. From Chicago to Denver, the BTM tracked a
Typical Business airfare that was 45% below the December 2002 mark.
BTM Route Dec. 2002 Typical
Business Fare
Dec. 2003 Typical
Business Fare
% YOY
Change
Newark-San Francisco $1,123 $249 -78
Los Angeles-NY (JFK) $1,123 $599 -47
Chicago (ORD)-Denver $730 $404 -45
Figure 1: Typical Business is the lowest fully refundable economy-class fare with mild restrictions
offered by the primary carrier in each route tracked by the BTM.
Rise in Leisure Airfares
In contrast to falling business airfares, airlines’ leisure fares are on the way up –
impacting corporations who have come to rely on the relatively cheap fares as a way to
lower T&E costs.
The BTM also tracks the Lowest Discount airfare, the lowest, most restrictive
fare. For 2003, the average Lowest Discount airfare across the index’s 215 routes was
$99 one-way, 3% higher than the level for all of 2002.
Lowest Discount fares usually require advance purchase of seven to 21 days, a
Saturday-night stay, and are usually nonrefundable.
Companies’ 2003 Average Airfares Lowest in Years, American Express Data Show
-more-
3
The rise in leisure airfares during 2003 comes after several years of declines. For
example, from 2001 to 2002, the Lowest Discount fares tracked in the BTM fell 16%,
while from 2000 to 2001 the fare level dropped 19%.
Despite the recent increase in leisure fares, they remain significantly cheaper than
the unrestricted Typical Business fares, and companies continue to steer corporate
travelers to nonrefundable leisure airfares.
For example, in 2003 Typical Business airfares were five-and-a-half times the
level of Lowest Discount airfares, down from a gap of six times during 2002.
Last year, more than 87% of tickets booked by American Express Corporate
Travel customers in the BTM’s routes were discount coach – which includes
nonrefundable airfares. About 9% of tickets were in full coach, while 2% were in first
class and 1% was in business class. Those proportions were relatively unchanged from
2002.
Companies’ Average Fare at Historic Lows
As a result of falling business airfare prices and growing competition from low-
fare carriers, corporate America’s 2003 average airfare tab was the lowest in six years.
The Average
Fare Paid for all of
2003 was $276 one-
way, down 2% from
2002, BTM data
show. The last time
the annual average
fare paid was lower
was in 1996, when
the average paid
was $256.
The Average
Fare Paid reflects the
actual price paid by
American Express Corporate Travel customers in the BTM’s routes and includes a
variety of fare types actually booked by business travelers, including full fares,
nonrefundable advance-purchase fares, and negotiated corporate discounts.
$280$292 $308
$276
$0
$50
$100
$150
$200
$250
$300
$350
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
What Companies Paid for Air Travel 1996-2003
Average Fare Paid
Figure 2: Average Fare Paid is the average one-way airfare paid by
customers of American Express Corporate Travel in 215 domestic routes
tracked by the American Express BTM
Companies’ 2003 Average Airfares Lowest in Years, American Express Data Show
-more-
4
The BTM’s Average Fare Paid continues to remain much lower than Typical
Business airfares – a measure of companies’ success in buffering themselves from
airlines’ published prices via negotiated discounts and greater use of leisure-type airfares.
For all of last year, the difference between the Average Fare Paid indicator and
Typical Business fares was 49%, compared to a difference of 50% in 2002.
Alternate Business Fares Proliferate
Another way companies are reducing their airfare bills is by using alternate
business airfares. Alternate business airfares are usually nonrefundable, have a $100
change fee, but do not require a Saturday stay. They may also require a 1-2 night
minimum stay and advance-purchase booking of up to 10 days.
While carriers have experimented with these fares over the past several years,
airlines in 2002 created more alternate business fares as a way to draw business travelers
back to the skies.
American Express regularly tracks both the volume and discount level of alternate
business airfares in 140 top domestic routes, as part of a new feature of the BTM.
According to the latest BTM data available, there were 524 alternate business
airfares available in major business travel routes as of October, up 10% from the same
month last year – and up 32% from October 2001.
Alternate business airfares were 33% below Typical Business airfares in October,
the same as in October 2002.
Corporate Discounts Keep International Travel Costs in Check
The BTM tracks a variety of airfare categories from 16 U.S. gateways to 157
international destinations. In 2003, first class, business class and discounted economy
airfares climbed, as carriers dealt with falling demand from the war in Iraq by cutting
back on capacity and raising prices on remaining inventory.
Despite these increases in published fare levels, American businesses managed to
avoid paying the full increases and held their average international airfare bills steady
from 2002 levels.
“There continues to be a fair amount of airline competition and deal making on
international routes to and from the U.S., especially for business-class seating,” noted
Restiano. “That means business travelers are able for the most part to fly business class
overseas – yet still within travel policy and budget guidelines.”
Companies’ 2003 Average Airfares Lowest in Years, American Express Data Show
5
In 2003, across the BTM’s 157 international routes, the average business class
fare was about $3,522 one-way, up 4% from the 2002 level. In addition, the average one-
way first class fare for all of 2003 was $5,296, a 2% increase from the year earlier.
Leisure-style international discount economy fares, an increasingly popular option
for corporations seeking to cut costs, rose to $1,058 one-way across BTM routes in 2003
– more than 4% above the 2002 level.
Yet, despite these increases, American business’ average one-way airfare in 2003
was about the same as in 2002 – $1,469 – thanks to better negotiations and a slight
increase in the use of discount economy fares.
The American Express Business Travel Monitor (BTM)
The BTM is a benchmarking service that offers corporations a comprehensive
collection of pricing data across major travel and entertainment (T&E) expense
categories in the marketplace today. It is produced by American Express Consulting,
which offers consulting and negotiating expertise to corporations. With the BTM,
companies can benchmark their travel costs against industry averages and the American
Express client base to determine if their travel management program is on the mark.
About American Express Corporate Services
American Express operates one of the world’s largest travel agencies, recording
$16 billion in worldwide travel sales in 2003. Through its Corporate Services group, the
company counts nearly 70 percent of the Fortune 500, along with tens of thousands of
mid-sized companies, as customers of its Corporate Travel, Corporate Card, and
Corporate Purchasing Solutions services. More information on expense management
tools from Corporate Services can be found at
http://www.americanexpress.com/corporateservices.
The American Express Company is a diversified worldwide travel, financial and
network services company founded in 1850. It is a leader in charge and credit cards,
Travelers Cheques, travel, financial planning, investment products, insurance and
international banking.
###