[BPP]

Can somebody ‘in the know’ please explain the huge increases in Business Class Long Haul fares.
At the beginning of last year LHR-BKK for example was averaging about £2.1K, now nearly double that.
This is way above any measure of inflation or fuel cost hike. Club Europe fares have also risen but nowhere near as much.
There also seems to be a ‘cartel’ operating acros the main carriers.
Are they selling the seats at these prices or just testing the market in hope?

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Jeffrey

[Tom Otley]

I’m not in the know, but here’s my guess…

1. Fuel is very expensive
2. So is everything else
3. Demand has come back strongly, but supply has not – labour shortages etc…
4. Aircraft are still grounded, so supply is further constrained, leading to higher prices.
5. There’s a backlog / shortage of new long-haul aircraft – the B747s were retired during Covid. So were the A380s, and then they scrambled to bring them back).
5. As a result, the much-talked about but rarely delivered ‘capacity discipline’ that airline CEO’s have always promised to help increase net profit margins has been imposed on them (in long haul, at least).

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Hellebore, Kopite, LondonAndy70, Peter, lostantipod, Polly, Jacob, tomwjsimpson, BPP

[TominScotland]

Tom, i also suspect that the absence of Chinese carriers on Asian routes and onwards to Oz has also pushed overall fares up although, of course, Chinese travellers have also been absent!!

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lostantipod

[cwoodward]

Oz is almost swamped by Chinese carriers and did not stop entirely during the pandemic. As with most carriers they of course minimised their flights during the worst of the pandemic but they only stopped entirely for a shot period.
If this alone had any effect at all on world ticket pricing it would have been very very minimal.
Hong Kong based Cathay Pacific is of course not a Chinese carrier. 46% controlled by John Swire group companies and operated by one of their HK based subsidiaries.
I see no lack of Chinese carrier flights around Asia ether.

High ticket prices are more about airlines needing to recover and the very high cost of fuel.

I don’t see ticket costs reducing any time soon as airlines will inclined to minimise flights so that aircraft are full and to recoup losses for as long as the market is strong.
This is a great and rare opportunity for many large established airlines to strengthen.

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Kopite, BPP

[tomyam42]

TomOtley. I think that your point 3 answers the question. Your points 4 & 5 are some details at the end of your 3. Markets are funny old things; Demand increases faster than supply due to crews, metal, intentional restriction, whatever and prices will rise. I do not buy the fuel story. If fuel was 20% of the total cost before and is now 40% it hurts but does not drive a doubling in sales prices.

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BPP

[Tom Otley]

Yes, you are right.

There’s also another forum thread where we discuss the further supply constraint (particularly with BA) of the lack of new long haul fuel-efficient aircraft, further constraining capacity and supply.

British Airways lacks widebody capacity

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Polly

[MartynSinclair]

[quote quote=1341700]At the beginning of last year LHR-BKK for example was averaging about £2.1K, now nearly double that.[/quote]

BKK specifically – currently only Thai and Eva offering direct flights, BA still preferring to run BA9/10 as cargo flights. Finnair flights via Helsinki now taking 3 and hours longer to get to BKK. Previously there were I believe 5-6 direct daily flights LHR-BKK (Eva/BA/QF/Thai).

Whilst Russian airspace remains closed, aircraft utilisation can not be maximised to keep all schedules going.

Spoke to a car mfg yesterday, who explained less vehicles being produced, monthly price increases, more profit per unit and every car coming through is being sold. All cancelled orders are appreciated because the same unit can be sold for more…

Welcome to 2023.

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Jeffrey, cwoodward, BPP

[TimFitzgeraldTC]

Good Question BPP

I’ve booked BKK and S.E.Asian routes for years for clients and essentially it comes down Supply and Demand. Talking to the carriers demand for Premium Class travel is up 50%+ – in some cases 100%+ yet supply is still constrained.

Whilst ME carriers are getting back to full schedules (but still not fully back) – European carriers haven’t returned and Chinese carriers (and CX) are still pretty much non-existent (CX slowly making an appearance). The Chinese carriers would often be price driven so keeping other carriers lowest fares in check. Especially on Australia routes (no idea what cwoodward is talking about with Oz being swamped with Chinese carriers – clearly not the case right now even if only just starting to return).

So Oz is clearly affected with connections through ME or SIN/KUL/BKK eating capacity leaving less for onward connections to Asia. This ultimately means that airlines can charge 40% more for base fares for the seats and easily sell out. Simply Put – They don’t have to flog seats at low fares in Premium cabins. SIN for example is pretty much sold out on every flight in F/J/W.

Even shorthaul BA have been 82% higher yield last year than year before. People simply will pay and the other massive factor on longhaul is that you have luxury leisure clashing with Corporate demand against constrained supply.

Airlines of course have no desire to lower fares whilst they can command such high “base” fare levels and get a decent yield. Once Chinese carriers really get back properly into the market we might begin to see prices coming down. Whilst fuel has dropped not yet seen this reflected in fuel surcharges that naturally don’t ever come down quite as quickly as they go up!

Still value to be found – have to book further in advance – or just find options leaving on some funky routings. But where we often worked with say a £2500 budget realistically have to look at £3500 (which like of QR/EK for example floor rate is now closer to £4k for S.E.Asia) from UK. Or have some terrible connections!

So for me – and I keep saying this to those I talk to, I don’t see any likely of fares dropping in 2023 or even 2024. Once they become embedded and mindset changes to accepting higher fares – question is whether we will ever see them drop (and as more airlines introduce Premium – this will create even more reason for fares to stay high).

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lostantipod, Polly, fatbear, DerekVH, stevescoots, RomP, esselle, BPP, MartynSinclair, cwoodward

[AMcWhirter]

Very valid Forum thread.

Issue with LHR-BKK is that there’s a capacity shortage. BA hasn’t returned with passenger flights and so there’s only Thai and Eva Air. The latter is capacity limited ex-LHR as it’s a fifth-freedom operator on LHR-BKK.

Last year I did post on Forum re the very high prices between the UK and Australia.

I mean between Spring and the Autumn SIA was charging between £9,000 and £12,000 for LHR-SYD return in business class. Similar high fares applied in the other classes. That period of the year would normally be considered low season for Australasia !

Checking the same fares in 2022 but starting from Sydney (rather than London) gave similar results. Indeed I discovered it was *slightly* less expensive to fly with ANA via HND than it was with SIA via SIN. Crazy really considering if anyone would be impacted by fuel prices it would be ANA.

So as Tim has noted above I believe it’s a combination of less available capacity, pent up consumer demand and airlines wanting to recoup losses during the pandemic.

With SIA being a sixth-freedom carrier there’s another factor. SIA carries huge numbers of travellers between Asia (including China) and Australia via SIN. (Europe-Australia is not so important a market for SIA as it once was) Now that China is opening up there will be many citizens there who will be booking international travel. This impacts of SIA’s prices.

Just now I checked SIA’s J fares for LHR-SYD-LHR in February and March and the prices are £9,000 to £10,000 (maybe higher still nearer Easter).

Those prices are more than twice the pre-pandemic levels for SIA.

I don’t believe fuel prices are the sole reason. I say that because airlines usually hedge their fuel prices and so it would depend on what sort of agreement they are locked into.

So more capacity is needed and it’s a pity TG has retired its A380s.

Conversely most A380 operators are reactivating their A380s to cope with demand in 2023.

As we have already reported both Etihad and Lufthansa are the latest to return some A380s to service this summer to meet demand.

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lostantipod, Polly, esselle, TimFitzgeraldTC, BPP

[CathayLoyalist2]

I recall Colin Marshall when CEO of BA stating that they will charge the price they think they can get until the flyers say no, so there is clearly enough people who will pay these, in my opinion, crazy fares. I will reschedule any leisure trips to Asia until late 2024 early 2025. I also recall a news story when the pandemic restrictions were eased of a caravan park in the West Country (UK) charging GBP 8,000 for two weeks when it would normally have been half that price. A psychologist provided insight as to why people will pay those prices

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Polly, theflyingnurse, cwoodward, AMcWhirter

[BPP]

Thanks everybody for your contributions, I am still of a mind that the current prices are excessive.
The cost of fuel during the Pandemic when airlines would (should!) have been forward purchasing was less than half of todays cost which again is little more than 6yrs ago!
I suspect (and hope) that these prices will prove to be unsustainable, some of the QR flights to BKK are as mentioned eye-wateringly and absurdly expensive.
If this is demand/capacity lead (and it would be interesting to know what the near-future load factors are) then with the current taxation and cost of living issues, where is the money comming from?
The all too obvious reduction in catering and service levels across the board must have reduced costs.
I might add that I have just this morning had an e-mail from QR with for the first time ever on my birthday, a 90 day discount code for 10% off a Premium Fare so there is hope yet!

[Bath_VIP]

I’ve noticed the same with fares to Texas & Louisiana. Affordable business class fares aren’t to be had at the moment.

My wife and I usually travel there once or twice a year for family reasons. This means we are usually able to plan ahead for dates and travel options and my target is to keep the total cost (fares, airport transfers & airport hotels) to under £1500 per person whilst travelling in premium cabins.

I am a professional statistician so keeping detailed records is second nature for me. Ever since I met my wife in Texas 10 years ago, I’ve tracked the total cost for the UK-Texas/Louisiana routing and the trend is clear from the chart here. Post pandemic it has been all premium economy and the most recent trip (which was short notice) broke my £1500pp target for the 1st time.

Hopefully I can break this trend for our next trip tentatively planned for May/June but I am not hopeful given the comments on this thread.

[AMcWhirter]

[quote quote=1341926]If this is demand/capacity lead (and it would be interesting to know what the near-future load factors are) then with the current taxation and cost of living issues, where is the money coming from?[/quote]

Indeed. Long-haul aviation is complex as network carriers source travellers from many different nations all of whom have different currency values (take CHF or S$ to GBP for example) and economic circumstances.

So a LHR-BKK Thai flight is not solely carrying UK and Thai travellers.

A smart carrier will target those nations who have the most valuable currencies.

As some of you I used to work in the travel trade in the 1970s before joining the magazine.

At that time the UK’s currency was weak compared to some of those in mainland Europe.

So when booking a long-haul flight with Swissair (a thrifty carrier if ever there was one) I would find it would give preference to those customers who were starting their trip in a country with a more valuable currency (than was GBP at that time).

UK agents might only be able to secure long-haul capacity with Swissair if it had seats which would otherwise go unsold.

(When currency value shifted in the early 1980s it all changed. And that was how cross border ticketing came to the fore).

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BPP

[TimFitzgeraldTC]

The other factor not mentioned affecting UK originating fares is the plunging value of the £ v $ since Brexit. Given air costs are usually in USD – it is only now we are seeing the full affects of the price rises we would have seen had we always been paying in effect in USD.

A few carriers mentioned to me when I see them that they restrict capacity in the UK markets to higher yield fares because the £ doesn’t go as far as it used to.

BATH Vip you can still get good fares – they do exist but it is more challenging. I have a trip to CUN in September and managed to get BA F via MIA and back direct in J with an overnight in Miami for under £2500.

On the cost of living stuff – it isn’t affecting everyone – that seems more media noise than reality on the ground. Same for the “high” taxation. Whilst undoubtedly affecting some people – there are more than enough people not impacted by it who spend on premium travel. Also the pandemic has meant more people for the next few years at least are prepared to invest more in travel experiences and comfort whilst travelling.

I booked nearly 1200 flight sectors last month (and researched many more) so very much aware of what is going on and Alex is right on Aus fares. Where it used to be an upper limit from Uk of £6-7k – that is now the lead fare for most carriers. Upper fares are £10k+ and flights are going full.

Asia – as others have seen – a struggle to get QR close to £3500 lead fares anywhere. With Premium Economy coming (and EK often selling this out on flights they sell it) on more carriers – people are paying fares that used to be the lower end of Business Class levels. AY/KL/EK all adding it in recent months – another reason why the floor on Business Class won’t drop soon. I’m surprised likes of TG/MH aren’t introducing it ASAP (not sure they have plans at all unless I’ve missed something). Likewise would imagine QR will come to that party soon – another way to keep J fares high.

Feels like a good subject to discuss sometime over a BT dinner / drinks evening………………!

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AMcWhirter, BPP

[AMcWhirter]

I cannot help but think of this YouTube originally posted some time ago.

At the time QR was one of the few global carriers continuing with long-haul flights. The CEO said it was all about finding the opportunity to earn revenue for his airline.

Some people wondered whether demand for long-haul flying would ever return to what it was before.

QR’s CEO later had to change his mind and meet demand by reactivating some A380s in the QR fleet.

[Author]

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