With the dramatic increase in airfares in 1996, executives who plan meetings may be looking at the new year with less than great expectations. Yet many airline analysts expect fares to stabilize or decrease in 1997.
"I think airfares overall reached a peak by Labor Day of 1996," says Terry Trippler, editor of the Minneapolis-based Airfare Report. "In 1997, barring any fuel cost catastrophe, we will start to see fares not only level off, but moderate. There should be a reduction in overall fares for '97."
The Air Transport Association's chief economist, David Swierenga, agrees. "I expect fares to come down overall, although we are still faced with reimposition of the ten percent federal ticket tax and that's one factor that may muddy the waters," he says. (He says Congress may not act to reinstitute the tax, which lapsed on Dec. 31, 1996, until the spring.)
Trippler's and Swierenga's predictions contrast sharply the 12 percent hike in average business travel fares in 1996 reported by American Express last September.
And according to Trippler, the news is potentially as good for meeting business as it is for business travelers. "I expect that group fares too will probably stabilize or go down in 1997," he says. More carriers now offer some form of "zone fares" for groups-flat fares based on travel between specified zones, or areas of the country, says Trippler.
Zone fare programs take on added importance given the uncertainty over airfares, according to Maureen Pickell, Northwest Airlines' manager of meeting and incentive sales, Eastern region. Pickell says Northwest has zone fares, good for up to two years, for more than 70 cities in the U.S. and Canada.
Pickell declined comment on the outlook for 1997 airfares. But, she says, "zone fares are not that vulnerable to changes in general. They are one way meeting and incentive planners can protect themselves."
Chrysler Corp.'s manager of corporate services, Charles Braswell, sees things differently, predicting that group airfares "will edge up" even higher in 1997. Zone fares can help, he adds, "but airlines are market driven.
"Going back about two years, the airlines' load factors were low, but they have since improved," says Braswell. "There's no advantage for them to sell seats at a lower price to groups."