Business airline fares set to climb

BUSINESS-CLASS air fares are set to rise further, but companies are scaling back travel budgets for executives, shows a survey by American Express published today.

First-class fares from Britain rose 2 per cent and business fares 1 per cent in the last three months compared to the previous quarter. In the past two years they rose by an average 9 per cent, the survey said.

Amex said this trend was expected to continue as aviation fuel prices keep rising and airlines start reducing capacity. "Fares for business travellers continue their inexorable rise, while... leisure tickets [are] at their lowest ever in real terms."

Economy-class fares have fallen steeply this year as airlines flooded North Atlantic routes with flights in the wake of Asia's financial crisis. But capacity is likely to be scaled back in 2000 as carriers return aircraft to Asian routes.

British Airways was the first airline to announce drastic cuts in capacity. In a strategy aimed at recovering from a plunge in profits, it plans to fly smaller aircraft carrying fewer economy-class passengers, but the same number of high-paying business travellers.

Amex said travel costs were a growing concern for global corporations, accounting for about 7 per cent of total operating costs .The concern is particularly strong in the US but is also evident in Britain.

UK companies may begin flying executives across the Atlantic via other European cities as business travel from the UK costs more, the report said.