Demand for business and leisure travel is expected to be stronger this summer than last, which means travelers will be fighting for seats that have been reduced significantly during the recession.
According to an analysis of first- and business-class travel in the first quarter by the International Air Transport Association, the trade group for the airline industry, the number of passengers traveling in these classes was 7.6 percent higher than in the period a year earlier. The number of passengers in economy was up 7.4 percent in the same period.
Growth in all classes of service is “being driven by business travel, rather than leisure,” the group’s analysis said. “As business confidence and world trade have turned up sharply, business travelers have returned. Consumer confidence has not recovered in the same way as business confidence.”
Major corporate travel agencies in the United States are also reporting strong growth in flying by business travelers. Dale Eastlund, senior director of the consulting group of Carlson Wagonlit Travel, the corporate travel management company, said airline bookings by North American corporate customers were up 15 percent in the first quarter, compared with the same period in 2009.
Michael Steiner, executive vice president of Ovation Corporate Travel in New York, said the number of airline transactions by Ovation’s corporate customers was 22.5 percent higher in the first four months of 2010, compared with the same period in 2009, while the number of airline transactions by its leisure customers was up 39 percent.
These double-digit increases in demand are in no way being matched by similar increases in the number of seats. The Air Transport Association, the trade group of the American airline industry, said domestic capacity will be only 0.2 percent higher this summer than last, while capacity on international routes will be up 6.6 percent.
“Seats will be limited,” said Michael Derchin, airline analyst for CRT Capital Group in Stamford, Conn. “It’s going to be a more difficult travel experience for business people, with 90 percent load factors in the peaks.”
The inevitable outcome of limited seats and stronger demand will be higher fares, at least compared with the greatly depressed levels of 2009.
Business- and first-class fares are up 10 percent globally from their “low point in mid-2009, but they’re still a lot lower than they were prerecession,” said Brian Pearce, chief economist of the international airline industry group. “It indicates the development of a relative shortage of seats.”
From January to April, the average ticket price booked by a corporate customer of Ovation Travel climbed 16.2 percent, Mr. Steiner said.
Mathias Eichelberger, director of airline relations for Egencia, the corporate travel division of Expedia, agreed that fares were rising. “There are going to be very full flights with high prices, especially on trans-Atlantic routes,” he said. “I think leisure travel on the trans-Atlantic is going to come back stronger, with a stronger dollar and overall consumer confidence.”