Rising airfares creating challenges for Asian corporates

SINGAPORE – Asian corporates need to review their business travel behaviour and implement cost-saving strategies to stay ahead of the region’s rising airfares, according to FCm Travel Solutions.

Identifying non-essential travel and opting for more economical flights are just two of the measures companies need to take if they want to maintain or reduce their travel budgets in the midst of climbing ticket prices.

Joseph Kao, FCm Travel Solutions’ regional director for Asia, said the region’s thriving economy had helped spur positive changes for the travel industry over recent years, but to the detriment of airfares.

“The evolution of our industry has certainly been exciting, but there has been a downside for companies and their travellers – a higher price for air travel,” he said.

Kao explained that Asia’s new interest in domestic and intra-Asia business travel, along with rising fuel costs, a boost in new/enhanced aircraft, and the shift to a commission-free environment, had all been triggers for airlines to increase their fares.

Similarly, the arrival of new low-cost carriers has created pricing wars – including penalties and fare restrictions – on competitive routes. And on government-controlled routes the number of carriers has been limited, thereby reducing competition and increasing fares.

“There are a number of strategies to help companies combat these increases and help ensure their travel spend does not spiral out of control,” Kao said.

“The first step is to carefully consider whether all business travel is absolutely needed. FCm has clients that have saved 10 to 60 per cent on their total air spend by replacing non-essential travel with video or teleconferencing. And this obviously pays dividends to the environment as well.

“For all business travel that is deemed essential, fares should be booked as early as possible. This not only guarantees the traveller a seat, but can save up to 15 per cent on the company’s air travel.”

Kao said reconsidering the class of air travel was another strategy for achieving substantial cost savings.

“Companies need to assess whether their people really need to travel Business Class, particularly on short-haul and domestic trips. If the journey is not long haul, Premium Economy (where available) offers a great alternative at 25 to 50 per cent less than a Business Class fare.

“FCm also recommends that companies adopt an ‘open skies’ travel policy in which all travellers and travel bookers are encouraged to look for the cheapest fare of the day for their domestic and short-haul travel. This will save their domestic air travel budget by up to 15 per cent.”

Kao said corporate culture was a critical factor in achieving cost reductions.

“In many companies, it often just takes some simple changes to the way they book their travel, and their attitudes towards business travel.

“It’s extremely important that company travellers and bookers are educated on the need for change, that their managers lead by example, and that a central travel policy is in place to support a consistent approach company-wide.”