A corporate travel specialist warns airfares are unlikely to fall in 2025.
Kelly Thomas, general manager of FCM Travel, says higher post-pandemic fares for premium seats are here to stay in the medium term due to a shortage of supply and high demand.
FCM is a Flight Centre division that handles bigger companies and businesses.
“It’s been interesting because in a cost-conscious environment we’re still seeing the front end of the plane consistently in high demand,” she says.
“Where [firms] are sending their people long distances for a long time we’re seeing business class demand is consistently high.”
Air New Zealand reports that one in five of its long-haul passengers are travelling in premium cabins.
With airline capacity 10% to 15% down on 2019, there was a shortage of seats. Air New Zealand, which has about 40% of the international market, has constrained capacity because more than a quarter of its 14-strong Dreamliner fleet has been out of action at times due to engine maintenance issues and other planes are undergoing cabin refurbishment on a rolling basis.
“Corporates are finding it harder to get a seat up the front because that demand from what we’re hearing from the [high-end] leisure side of things is still quite strong,” said Thomas.
“Business class bookings come at a cost, but they need to be booked well in advance because that demand is there.”
She said while it was anyone’s guess where prices would go in 2025, she warned there was unlikely to be any big price falls.
“We’ve been told to expect no major movement, so we hope that there may be a little bit more capacity potentially coming into New Zealand which may mean a softening of some pricing.
“It feels very much like those days of getting a really good deal up to Europe if you book well in advance in the front end of the plane is a thing of the past. If you want it, you’re going to need to really pay for it.”
She said FCM was now having “more robust conversations” with corporate customers than pre-Covid around the importance of buying early because the data shows the earlier that you book, the cheaper it is going to be.
“And we’ve always told that story, but there were times when it would prove untrue because you could, at the last minute, step up to a pretty good business class fare.
“But that just doesn’t happen anymore like it used to.”
Flying through the Middle East remains a popular way to get to Britain and Europe.
New Zealand is served by Emirates which flies daily from Auckland and Christchurch (via Sydney) to Dubai and Qatar flying daily from Auckland to Doha and beyond.
“They’re two great products - Emirates now having that Premium Economy cabin, for (Economy) travellers who want just a little bit more.”
The lounge bar for first and business-class passengers sets it apart from other airlines.
“I think it offers passengers a really nice area to stand up, stretch their legs and walk around. Sitting there you potentially connect with another traveller, having a conversation and just feeling like you’re in an area that’s a little bit more social is quite a nice opportunity for people.”
Qatar offers its coveted Q-Suites, promoted as first class in business, and a good reputation for its dining-on-demand food offer.
Emirates will in January launch its first aircraft type since 2008, the Airbus A350 and while there’s been no announcement on the plane serving this market, it will be used on connecting flights out of Dubai and its premium cabins are hotly anticipated by travellers.
Through Asia, Cathay Pacific and Singapore Airlines set the standard at the front of the plane.
Both airlines are upgrading their premium cabins in multi-year projects with Cathay starting on its Boeing 777s out of Hong Kong and Singapore Airlines in the early stage of an upgrade to its A350s – the aircraft that fly to New Zealand.
“It’s like Emirates with the bar space, Singapore Airlines with your book the cook. It’s those little things that make some of those long journeys just a little bit more memorable.”
She said this was important for corporate travel clients, some of whom made trips to Europe nearly every month.
“If they’re travelling a certain number of hours, a certain number of times a year, they’re entitled typically to a more comfortable journey and that really links back to a bit more of a focus on traveller wellness. Some of these people are doing important work and when they get to these destinations they need to get there refreshed and not be too sleep-deprived.
“Some of our top travellers consistently do it month on month and honestly, I think how do they do it? It can be a pretty draining schedule for some of them.”
To the United States, Qantas’ New York flights using its Dreamliners have the edge on Air NZ for its cabins.
“It hits all the bases. Qantas is known for its real consistency in terms of good product and good service overall.”
The Australian airline was now flying more across the Tasman to connect more passengers to its other long-haul flights and its targeting of Air NZ’s gold mileage members was a signal of its ambition in the market.
“More people tend to be choosing Qantas for good product, reliable modern aircraft, and on top of that, you know, they’ve got their status so they can enjoy the lounges and all of that kind of thing that comes with it.”
Air New Zealand’s new Business Premier cabins can’t come soon enough for the airline which has faced delays bringing in new planes and launching its refurbishmemt of existing Dreamliners.
Thomas says the airline will drip-feed the refurbished aircraft into its fleet as they become available.
“It will give Kiwis a really nice taste of what’s to come, They’re obviously going to try and push those retrofits through as quickly as they can. They’re going to share them around so that people can actually start to get a real feel for what they can expect.”
She says the airline works hard in other areas to make up for the older cabins.
“I think Air New Zealand generally nail the service. When you step on an Air New Zealand aircraft and you feel like you’re going home, it’s the crew and the little things like recently refreshing a lot of their snack options and those kinds of things.”
She said given the state of Air NZ’s hard product compared to other airlines, it needed to look carefully at what it charged for its top tickets.
“The same sentiment that most New Zealanders would share is yes, it does feel a little bit cheeky. But I think what Kiwi travellers love is how they feel when they’re on board.”
Air New Zealand also has another big weapon – its Airpoints programme which deeply penetrates into the country. Many of its 4.6 million members earn and burn them on flights and were incentivised to stick with the airline.
“They will pay through the nose for a product that probably is inferior to some of the other competitor airlines that are travelling in here, but they go back to Air New Zealand time and again.
“The big US carriers had also improved their hard product and their lounges, a key part of the travel experience. All of them are talking about these refreshed offerings, new offerings, unveiling the latest in premium cabins and connectivity on board - all of that kind of thing.”
Hawaiian Airlines is offering Starlink Wi-Fi free on its long-haul flights.
Thomas said it was going to be a fascinating year ahead for travel against a backdrop of global insecurity.
“With Ukraine and Russia and Trump and all of those things happening, you sort of pause for a moment and you think, hm, what’s going to happen here? But the world keeps moving - when war broke out in the Ukraine things kept moving ... a volcano just went off in Bali, things keep moving,“ she says.
“I think as travellers we’ve become a little bit more resilient. Given what we’ve been through and so 10 years ago we might have seen a real slowdown and a bit of hesitancy and let’s just wait and see what happens. If people can get through, through Covid they can probably get through anything.
“Travellers were turning increasingly to agents as travel remained bumpy. If something goes wrong, you want somebody to call at the end of the phone and someone who can move you around wherever you need to go. And there’s one thing that we know for sure is that the airlines are not resourcing their call centres.”
Grant Bradley has worked at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
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