Fifty-one percent of senior finance executives in Singapore polled express that they will spend the same or more on business travel over the next years compared with last year.
As growth rates in key markets within Asia-Pacific slow down, regional businesses are looking to maximise the sales opportunities provided by business travel, with 89% of senior financial executives indicating their plan to spend more or the same on business travel in order to meet with current and prospective customers. Among Singapore financial executives, 94% say the same.
Dr Carl Jones, Head of American Express Advisory Services for the Asia Pacific region explained that continued instability in Europe, slowing growth rates in specific markets within Asia and a slight uplift in the US economy have driven these fare trends. (Rome, pictured)
“Companies in Asia Pacific are still shying away from doing business in Europe so airfares to this region continue to fall. Interestingly, fares to the Americas have increased 2% in the last quarter – the first quarter on quarter increase in the last six months. This is noticeably seen in the Australia to North American routes. It is remarkable to see the dramatic rebound (12%) in demand at the first shoots of economic recovery, as companies look to nurture business growth.”
Demand for travel within the Asian domestic economies remains strong but slowing growth rates and the introduction of low cost carriers in some of the markets has increased domestic fares by just 1 % in the last quarter. Intra-Asia fares have performed similarly and as supply responds to increasing demand for intra-Asia travel, fares have remained flat compared to the last quarter, according to American Express Business Travel Monitor.
Dr Jones says, “As key markets in the region experience the slowing down of growth rates, domestic and intra-Asia air fares are likely to see moderate growth throughout 2012. As a result, companies are continuing to look at smarter ways to manage their travel investment.”
Reduce prices for Intra Asia Pacific-Singapore travel
Despite the slight increase of domestic fares across the Asia-Pacific region, airfares in Singapore decreased across the board. Singapore published fares fell 1% within Intra Asia Pacific and 3% to Europe, Middle East & Africa.
Compared to the previous quarter, fares were down 1% overall. Fares to Europe, Middle East & Africa dropped 1% along with flat rates to Intra Asia Pacific and Americas.
“The reduced prices in Singapore are likely a result of slower economical development and increased competition within the region. Companies are still aggressively managing travel policy and this is being reflected in the overall demand that we see in the marketplace. Ongoing uncertainty with the sovereign debt crisis in Europe continues to erode confidence, and reduce airfare growth from the previous highs seen in Asia.
“High fuel prices will likely stay and as travel continues to be a priority for Singaporean businesses, fares are likely to remain at these levels, albeit with a slower increase.”
According to Dr Jones, companies expect that airfare prices will rise, and so are continuing to seek expert advice to ensure that their current contracts with suppliers are best in class. It is essential to leverage the overall corporate spend to maximize returns on travel investment, and this can only take place with a well managed travel programme.
“We have particularly seen companies showing stronger interest in reviewing whether their supplier contracts are well negotiated and well complied with. Alternatives to travel are being looked at as part of policy reviews, but companies know well that top line growths are usually driven by face to face sales meetings, particularly in the Asia-Pacific region.”
