AIRLINE TICKET PRICES are expected to increase in the UK next year by up to 3.1 per cent, but hotel rates are likely to fall due to a post-Olympics slowdown. These predictions are made in Carlson Wagonlit Travel’s forecast on global travel prices for 2013. Despite continuing eurozone troubles, overall air ticket prices in Europe are expected to “increase slightly” by an average of around 2.5 per cent next year, although these rises will be higher in the UK than most of its European competitors. CWT is predicting increases of between 2.3 and 3.1 per cent for airline fares in the UK during the first half of 2013. The TMC said the UK should enjoy “strong business travel demand” in 2013, while “tight capacity control” by airlines and more consolidation within the aviation industry would lead to high load factors and a continuing rise in air fares despite the economic uncertainty in the region. But travel buyers should benefit from a fall
FORECAST: UK AIR FARES SET TO CONTINUE RISING
in UK hotel rates in 2013, CWT forecasting a 0.6-0.8 per cent reduction in the first six months of the year with a bigger fall likely (1.2-1.5 per cent) in the second half of 2013. This compares to an estimate of an overall 1.3 per cent rise in hotel rates across the EMEA region. Ground transport costs are set to rise in the UK with car rental forecast to increase by 4.1-4.6 per cent in the first half of 2013, while rail costs are likely to go up by 2.5-2.7 per cent over the same period. Nick Vournakis, senior vice-president for CWT Solutions Group, said: “While slightly higher prices will be the reality again next year as demand for travel outpaces supply in most places, our forecast demonstrates there is still plenty travel buyers can do to watch costs and take care of travellers through other measures, including re-examining how they influence traveller behaviour.” ■ See Databank, p26
Sir Richard Branson
VIRGIN LOSES WEST COAST RAIL SERVICE TO FIRST GROUP
FIRST GROUP HAS BEATEN Virgin Trains to win the bid to run rail services on the flagship West Coast line. Virgin has been operating services on the line since 1997 but the government has awarded the new franchise, which runs from December 2012 to 2026, to First Group. The Department for Transport’s decision will mean the end of the
Virgin Trains brand in December. The company lost its other rail franchise – Cross Country – in 2007. First Group said it would be adding capacity on the route, which runs from London’s Euston to the West Midlands, Greater Manchester, Liverpool, Glasgow and Edinburgh. First Group was awarded the franchise partly because it outbid
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Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?
Sir Richard Branson, commenting on the DfT’
s “flawed” franchise system
Virgin Trains (industry sources suggest First Group bid £6.5 to £7 billion over 14 years compared with Virgin’s offer of £5.5 to £6 billion) and partly because of its promise to improve services. Tim O’Toole, First Group’s chief executive, said: “We will be making significant improvements, including reduced journey times and introducing new direct services.” Sir Richard Branson said Virgin Trains could not have bid any more to retain the franchise. “To have bid more would have involved dramatic cuts to customer quality and considerable fare rises, which we were unwilling to entertain,” he said. “We also did not want to risk letting everybody down with almost certain bankruptcy at some time during the franchise, as happened to GNER and National Express who overbid on the East Coast mainline.” But rail minister Theresa Villiers said that the new franchise
would “deliver big improvements for passengers, with more seats and plans for more services”. ■ See UK rail franchise feature, p84