Fares to Asia on the Increase

(Dive Travel Business News - September 9, 2010) -- Asia-Pacific airlines are raising ticket prices in response to a strong economic rebound in Asia, led by China, reflecting growing consumer confidence across the Asia-Pacific region. The International Air Transport Association (IATA) reports that the global passenger traffic to expand by 7.1 percent this year despite a projected easing of the economic rebound in the second half of 2010. 

PATA reports that Fiji, the Marshall Islands, The Northern Marianas, Palau, Papua New Guinea, Samoa, Tahiti and Tonga all recorded double-digit increases in their China arrivals counts last year, ranging from a low of 11% to a high of 66%. In addition, the compound annual gross rate (CAGR) for the 2005-2009 period for most of these Pacific island destinations has also been relatively high, as Chinese travellers continue to search for new international destinations for both business and pleasure.

According to analysts, the increased air fares is a result of increased demand for air travel in Asia as travelers who had held off travel since the US-triggered global economic meltdown that struck in the third quarter of 2008. While average airline fares are rising, average one-way economy fares are still 5% below the peak levels in early 2008 before the recession hit, while premium  airline fares remain 20 percent below the pre-recession peaks, IATA reports.

Hong Kong-based Cathay Pacific and its subsidiary Dragonair posted July passenger traffic figures that were 19.5 percent higher than in 2009 with the pair carrying 2.48 million passengers combined. Cathay Pacific declined to comment on whether the carriers had jacked up prices.

Korean Air bumped up ticket prices for international passengers by up to 10 percent in August, its second increase since June. Australian flag-carrier Qantas increased its international and domestic fares on July 28 by three percent.

Singapore Airlines (SIA) said it will raise fares on certain routes from October 1, 2010. While the carrier did not give details of the increases, the local Straits Times newspaper said SIA raised fares by as much as $US148  for an economy seat and US$742 dollars for a premium ticket.

While airfares are up airlines remain cautious about expanding seat capacity and adding routes. IATA indicates that the airline industry's recovery will be affected by the forecast slowdown in global economic growth in the second half of 2010.

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