13 February 2003 | Robin Parker
Business travel will continue to be a buyers' market this year as crisis-hit airlines and hotels are forced to slash corporate rates.
In its quarterly corporate travel indices, American Express says it expects more aggressive discounting among mid-priced hotels and flexible airfares aimed at the business traveller.
The company also predicted a blurring of the boundaries between lower and mid-range services as companies offer discounts to counter the rise of budget airlines and hotels, which will try to add more services.
Low-cost airlines carry 25 per cent of UK passengers. Ryanair, the low-cost carrier that became the fourth largest European airline after it bought Buzz last month, said it will carry 24 million passengers in the next year.
UK economy fares to western Europe fell by 14.1 per cent in the last quarter of 2002, and by 30 per cent year-on-year, while business class fares fell by 0.5 per cent annually.
Matthew Davis, director of global consulting services at American Express, said there was still room for economy fares to drop, but airlines would have to offer more business discounts to remain competitive.
"Business-class prices are out of kilter, especially in the UK, and we expect more airlines to offer more flexible fares," he said.
"Premium fares must come down as airlines look to business class travel, albeit at a lower rate, to recoup lost revenue. It's an open buyers' market."
Airfares to London showed their biggest decrease in three years, while UK hotels recorded the slowest annual price growth of the six European markets studied.
Davis attributed this largely to frustration with the state of the UK's transport system.
"London has always been a high-demand destination, but there are signs of a general malaise, as the quality of life and infrastructure has become quite poor compared to other European destinations," he said.