Balance of power shifts as prices and demand grow

16 February 2006
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16 February 2006 | Amon Cohen

Increased demand and rising prices look set to force up business travel costs in 2006, according to exhibitors at the Business Travel Show in London.

BTI UK, the country's largest travel management company, told SM the number of air tickets bought by its top 100 clients rose 8 per cent in December 2005 compared to the same month the previous year.

The average fare rose 4.9 per cent to produce a total airfare bill which was 13.3 per cent higher than 12 months earlier. Initial figures for January look similar.

Mike Platt, managing director of BTI UK, said: "We are moving from a buyer's to a seller's market."

The overall figures do, however, mask wide geographical variations. Average fares from the UK to North America and the Far East are both up 9.1 per cent, while domestic fares are up only 0.9 per cent and fares to continental Europe are down 9.6 per cent, owing to strong competition between low-cost carriers and traditional airlines.

However, Platt warned: "I can't see European fares going down much longer. Airlines are getting more confident."

The price of meetings also looks set to rise. Hotel and meetings booking agency Booking Services International told SM that conference bookings for December and January were 7.2 per cent higher than the year before. "Sooner or later, prices are going to increase," said sales director Kevin Wayt.

The latest Barclaycard Business Travel Survey 2005-06 also confirmed growth in demand. Forty-five per cent of the 2,500 surveyed said they are travelling more than a year ago, compared with 20 per cent who are travelling less. A total of 33 per cent said business expansion overseas was the reason for the rise. A further 18 per cent attributed it to domestic growth.

The SM Business Travel Supplement is out on 27 April.

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