Data Bomb

Corporate Travellers Get A Double Whammy Win With Restricted Domestic Fares

When I get bored, I sometimes play around with data. (Everyone needs a hobby.) And so, here is a (slightly) interesting thing I found out about Australian domestic airfares  ….  Leisure travellers deliver a big benefit to business travellers that use cheap fares.

The chart shows the monthly variations of the Domestic Airfare Index over the past four years. Each line is a Sept-Aug year. The variation is around the average level of each year. So the lines show by how much each month was dearer or cheaper than the average. BUT, I did one extra sneaky thing. The fare index is actually a composite of the component indices for each fare family – Economy, Restricted and Cheapest. So I weighted the components according to a typical corporate mix of fare types, based on quite a lot of data that I have. SO, the result shows the relative expensiveness of domestic airfares in each month as would be experienced by a corporate buyer, pre-discounts.  

SO WHAT? So, this shows that the most expensive months for business travellers are the holiday months over summer, and not the mid-year business months. Leisure travellers have a much bigger impact on business travel costs than business travellers.

AND SO? Now that you (the corporate) are using a lot more cheap, highly restricted airfares, you are winning in two ways, Firstly, they are a lot cheaper, even when you factor in some lost fares etc. Fare type mix is the single biggest way to reduce air costs (after not travelling).Secondly, the cheapest fares get even cheaper, relatively, in the peak business months, because they are safely away from the peak leisure season. It’s a double whammy win, and a confirmation of the benefit of not buying flexible fares. This double-benefit is the point of this article  ….  DON’T use flexible fares.

And, unless you are a large buyer that still uses a lot of flexible fares, your negotiated discounts from the airlines now mean less.

Please contact me if you would like to chat about this. toc@butlercaroye.com.au