Indian biz destinations see dramatic decrease in air ticket prices across APAC, says 2009 Egencia Global Study

Gurgaon: Egencia(tm), the world's fifth largest travel management
company, and part of Expedia, Inc., the world's largest travel market place,
unveiled its 2009 Global Benchmarking Study, evaluating the current economic climate
and its impact on travel management trends and the supply environment for corporate
travel. The study focuses on top domestic and international corporate travel markets
in Asia-Pacific, North America and Europe. Building further on Egencia's 2009
Forecast and Negotiability Index released last November, this study analyzes
industry trends, supplier research and capacity implications for the rest of the
year 2009.
APAC has witnessed a substantial decrease in average ticket prices (ATP) for all
major corporate travel destinations. Capacity cuts, consolidation/alliance
coordination and the strength of the dollar have contributed upward pressure on air
pricing, but declining demand, economic uncertainty and a sustained decline in oil
prices have driven downward pressure. Decreased demand and cut-backs on meetings
have contributed downward pressure on pricing of hotel lodging as well.

Says Mr. Gaurav Sundaram, Country Director, Egencia India, "Indian enterprises
increasingly understand the business reality that corporate travel represents the
2nd largest controllable cost. According to our study, comparing Q1 2008 with Q1
2009, the average ticket prices (ATP) for top corporate travel destinations like
Delhi and Mumbai have decreased by as much as 50%. Bangalore ATP too has witnessed a
downslide of 35%. This indicates that Indian enterprises can lean into the
challenging market conditions, achieve greater control over their travel programs
and make significant savings on their direct and indirect travel expenses."
The study also indicates that the rapid growth in air capacity registered in APAC
between 2002 and 2008 has now subsided, adds Sundaram.

Elaborating on the YOY fall in average daily rates (ADR) for hotels in the same time
period, he says, "While all APAC destinations have registered decline in ADR, Delhi
has been most severely hit with a 44% decline followed by Mumbai at 38%.The ADR
decline in Bangalore at 15% is less than corresponding ADR decreases in Singapore
(35%), Sydney (33%), Melbourne (24%), Shanghai and Tokyo (17% each)." Sundaram
highlights several factors that have contributed to the decrease in corporate travel
ATP's and ADR's in India during the survey period -

· A very significant impact on ATP & ADR was due sharp rise in the value of
US$ vis-à-vis Indian Rupee.
· Economic slowdown and the resultant travel squeeze compounded by a
significant trend towards downgrading in class of travel & stay have also influenced
these matrices.
· Incoming corporate travel especially delegations, in Q1 2009, have been
impacted by the imminent general elections and resultant political uncertainty.
· The Mumbai terror attacks in November 2008 impacted occupancy as well as
inbound traffic during the peak season of Dec08-Feb09, which was further affected by
travel advisories issued by some governments.
· Indian hotels and airlines have broadened their basket of services by
focusing more on the budget/ economy segment, thereby diluting overall earnings and
driving down ATP's/ADR's across corporate travel destinations.
The Egencia study illustrates the impact of changes in ATP and ADR figures (in US$),
for the top corporate travel destinations in APAC, between Q1 2008 and Q1 2009

Commenting on the global scenario in corporate travel, Rob Greyber, President,
Egencia, said, "The impact of an uncertain economy is evident in the corporate
travel industry. As companies tighten control over travel spend, the resulting
decrease in demand has resulted in significant YOY declines in average daily rates
(ADR) and average ticket prices (ATP) for most corporate travel markets in the first
quarter of 2009."
As part of its Global Benchmarking study, Egencia also surveyed over 100 travel
buyers to analyze if and what actions companies were taking to control travel spend
and how their expectations had changed in the last several months. As against 48%
respondents in October 2008, as many as 64% of travel managers claimed to have
reduced their corporate travel slightly or significantly. Surprisingly, as many as
13% respondents had actually increased corporate travel slightly, up from just 3%
six months ago.

The top practices travel managers are using to save on travel costs include:
· Advanced booking of airline tickets (58%, up from 55% in Fall 2008)
· Active tracking of unused tickets (57%, up from 44%)
· Enforcing travel policy more rigorously (53%, up from 43%)
Says Pam Keenan Fritz, Senior Vice President, Egencia North America, "We've seen
corporate travel buyers trending toward more active spend management. Our clients
are controlling spend through the greater use of advanced booking, unused ticket
tracking and more rigorous policy enforcement. Other travel procurement initiatives
include re-negotiating supply contracts (19%) and enforcing the use of a single
corporate travel provider (19%) to optimize travel spends management."
03/06/09 PRESS RELEASE/Egencia

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Jun 2009