June 2017 has seen LCC fares across Europe decrease by 7% compared to June last year. This is also the first month since February 2016 where fares 1 week before travel have fallen further than the average, suggesting that the business-market “bubble” may finally have burst.
Fares in June 2017 versus 2016 by purchase point
It was always going to be difficult for June 2017 to impress us with LCC fares. We’ve seen fares down every month on average this year – in fact the last time we saw growth in LCC fares was June last year, the base month for June 2017 comparisons. Clearly, fares for this month were always going to come down, and they had a long way to fall.
Year-on-year fare change by month since Jan-16
One clear surprise in this month’s results is that one-week fares have fallen by 11%, much greater than the percentage falls of any other purchase points. At several points in the past year we have pointed to the strong performance of 1 week fares (the last time they were not the strongest performing purchase point in any month was September 2016) to say “the business market is holding up, it is simply leisure fares that are falling” – however this month marks a clear departure from that storyline and we will be monitoring the situation very closely in the coming months.
H1 2017 Fare Review
June 2017 completes our dataset for the first half of 2017 and marks a good point to take stock of the overall performance so far this year. The chart below shows H1 performance for the last 4 years (for airlines with comparable data in that period). Unsurprisingly to regular readers of the fares articles, 2017 has been a poor performer. Fares are down 7% compared to H1 2016, and 11% compared to H1 2015.
H1 fare performance 2014 to 2017
The impact has been very different among the various airlines in our database. On the one hand, we have already reported on the very tough year for Jet2 as a result of capacity investment, and on the other Norwegian are sat on a very tidy 8% rise, most likely due to regression after a bitter fare war with SAS around 2015.
H1 Fare Performance 2017 v 2015 by airline
Europe’s largest low-cost carriers, easyJet and Ryanair, are sat in the middle with fares drops of 9-10% (just slightly below the average).
H1 fare performance 2017 v 2015 for easyJet and Ryanair by purchase point
However, this does not tell the whole story. Breaking down that H1 2015 v H1 2017 picture for the two giants reveals two very different strategies. Ryanair, with their shift towards primary airports and city-city services have actually seen 4% growth in 1-week fares in this generally weak period, which suggests a strong increase in business travellers. On the reverse end, while easyJet’s 3 month performance (i.e. leisure passengers) has been more stable than Ryanair, it has slumped to a 13% drop in 1 week fares.
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