2016 will be a year to forget for yield managers across Europe as the latest data from RDC’s Apex fare module reveals how a string of external and internal factors caused fares to drop considerably during the second half of last year.
The year appeared to start in an uneventful manner with observed fares down 2.1% in quarter one (Q1) which is traditionally quiet. Things began to unravel a little in Q2 when figures showed fares were down 6.5%. The timing of Easter will have had an impact (Q2 in 2015, Q1 2016).
Data Source: Apex Fare Module – Showing year on year decrease in fare by quarter
Fares were at the lowest point in Q3 of 2016, down 10.6% on Q3 2015. While there are countless impacts on airline fares from day to day, the correlation of the “Brexit” announcement and the drop of fares in the first full quarter following the referendum is impossible to ignore. In the final quarter of 2016, fares were still 8.2% lower than 2015. Fare performance in 2017 will be vital to monitor going forward.
Data Source: Apex Fare Module – Showing average fare by month
The wider global-political scene was dominated by a rise in violent terrorism, which has turned Western European consumers away from many high-growth holiday destinations in North Africa and the Eastern Mediterranean (Egypt, Tunisia, Turkey etc.) and several major cities such as Paris and Brussels. The market has seen a significant decline in oil prices, coming into full effect as many unfavourable long-term hedging contracts have come to an end. This has allowed airlines to compete on price much more freely than before and attempt to stimulate the market.
This year we will be providing regular articles following the trend in airline fares across Europe and beyond, follow us on LinkedIn or Twitter to see these updates as they are released.