BA Supplement - Travel pricing - Rise and shine.

(From Financial Director)

Byline: Amon Cohen.

Business is on the march once more. The number of miles flown by airline passengers worldwide was 16% higher in the first 11 months of 2004 than the same period for 2003, meaning the skies are busier now than they were during the last boom period in 2000.

The figures are even up in the UK, where we never really stopped flying, other than for a few weeks after 9/11. Members of the Guild of Travel Management Companies, who account for 80% of all business travel reservations in the UK, booked about 10% more airline tickets last year than in 2003.

A reviving global economy explains, for the most part, why the numbers are up. Low fares have also helped to keep airline seats filled. The no-frills carriers have led an enduring pricing revolution, with fares on many short-haul routes more than 50% lower today than they were at the beginning of the decade.

However, the balance of supply and demand has shifted. The cost of travel will be kept in check in some markets (intense competition on European short-haul routes, for instance, means little change is expected there), but travel professionals expect prices to climb in 2005.

There are two caveats to this statement. The first is the usual one, post 9/11, that all bets are off in the event of another major terrorist strike. The second is that price will only rise for the unwary. In its forecast for 2005, travel management company Carlson Wagonlit estimates airfares will rise an average 5% but adds: "The opportunities for cost reductions and savings should enable corporations that are managing their air travel well to maintain their spend for the year ahead."